US Stocks Snap Back Monday 06/21 16:20
Stocks rebounded on Wall Street Monday, clawing back most of their sharp
loss from last week.
NEW YORK (AP) -- Stocks rebounded on Wall Street Monday, clawing back most
of their sharp loss from last week, as the initial jolt passes from the Federal
Reserve's reminder that it will eventually offer less help for markets.
The S&P 500 snapped 58.34 points higher, or 1.4%, to 4,224.79 and recovered
nearly three-quarters of its worst weekly loss since February. Oil producers,
banks and other companies that were hit particularly hard last week led the way.
The Dow Jones Industrial Average gained 586.89, or 1.8%, to 33,876.97, and
the Nasdaq composite rose 111.10, or 0.8%, to 14,141.48.
Investors are still figuring all the ramifications of the Fed's latest
meeting on interest-rate policy, where it indicated it may start raising
short-term rates by late 2023. That's earlier than previously thought. The Fed
also began talks about slowing programs meant to keep longer-term rates low, an
acknowledgment of the strengthening economy and threat of higher inflation.
The market's immediate reaction to last week's Fed news was to send stocks
lower and interest rates higher. Any shift by the Fed would be a big deal,
after investors have feasted on easy conditions with ultra-low rates for more
than a year. Higher rates would make stock prices, which have been climbing
faster than corporate profits, look even more expensive than they do already.
But it's not like the Fed said it will jack rates higher off their record
low of nearly zero anytime soon.
"If markets are worried about a march back to more normal monetary and
fiscal policy as the economy recovers, it will be a very long march," Barings
chief global strategist Christopher Smart said in a note. In the meantime,
support from both the Federal Reserve and the U.S. government should continue
to help stock prices, even if they do look expensive compared with history, he
Companies whose profits are the most closely tied to the economy's strength
and inflation were among the market's strongest on Monday.
Hess, Marathon Oil and Devon Energy all rose at least 6.9% as energy stocks
rallied with the price of oil.
Banks were also strong, with Bank of America up 2.5% and Wells Fargo
High-growth companies able to flourish almost regardless of the economy
lagged behind, meanwhile. It's a reversal from last week's trend, when
investors rattled by the Fed piled back into the biggest winners of the
Amazon slipped 0.9% Monday, for example, and the lagging performance for
tech meant the Nasdaq was trailing other indexes.
Shorter-term yields slipped, and longer-term yields rose in another reversal
from last week's initial reaction to the Fed news.
The two-year Treasury yield dipped to 0.25% from 0.26% late Friday, while
the 10-year yield rose to 1.49% from 1.45%.
More bumps may be ahead for markets, which had been mostly quiet for weeks
before the Fed's announcement. Fed Chair Jerome Powell will speak before a
House subcommittee on Tuesday about the Fed's response to the pandemic.
On Friday, investors will see what the Federal Reserve's preferred gauge for
inflation says about May. Prices have been bursting higher across the economy,
from airfares to restaurant meals, but the Fed has so far said it expects the
big increases to be only temporary. If it proves to be longer lasting, the Fed
may have to get much more aggressive about raising rates.
Corporate deals helped lift shares of some companies well beyond the
market's gains. Industrial products maker Raven Industries jumped 49.3% on news
it is being bought by CNH Industrial. Engineered products company Lydall surged
85.4% on news of its sale to Clearlake Capital-backed Unifrax.
Wall Street's strong gains followed up on a tumultuous day of trading that
preceded it in Asia.
Japan's Nikkei 225 sank 3.3%, while Hong Kong's Hang Seng fell 1.1% in the
first trading following Wall Street's tumble on Friday. South Korea's Kospi
lost 0.8%, but markets calmed as trading headed westward.
Across Europe, stock indexes made mostly modest gains. Germany's DAX