Top Line

Stock markets edged higher on Monday and investors supported their worst bearish fears as trading resumed in a generally auspicious fourth quarter, with the Dow Jones Industrial Average posting its second best day of 2022.

Key Facts

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The Dow gained 2.7%, or nearly 760 points — the second biggest increase of the year on a percentage basis — while the S&P 500 gained 2.6% and the tech-heavy Nasdaq gained 2.3%.

All three indices posted their worst September in more than a decade and the rally came after the S&P fell for the third straight quarter for the first time since 2009.

UBS chief investment officer Mark Heifel told Monday’s note that the fourth quarter brought more positive sentiment to clients, and for good reason — on average, the S&P is up 4.8% in the last three months of the year since 1988. ,

Investors reacted positively to the Federal Reserve, which began moving toward an “incrementally indifferent” attitude on interest rate hikes over the weekend, Mark Hackett, head of investment research nationwide, said Monday. The worries and tensions began to outweigh inflation.”

Bond markets corrected on Monday, with the 10-year US Treasury yield falling 14 basis points to 3.7%, down nearly 35 basis points from last week’s decade high, and following a 10-year backing from the British government. The British Gilt Yield fell by 13 basis points. The change in aggressive financial policy caused a stir in the market.

Energy stocks Exxon, Shell and Chevron were among the biggest risers on Monday, each of which spurred crude prices by about 5%, following reports OPEC+ is making massive production cuts, while the most notable falls. The one was Tesla, which then fell 9% to $242.37. Quarterly vehicle delivery fell short of estimates.

Adverse

Not all analysts proved optimistic on Monday: Goldman Sachs said it forecasts the S&P to close at 3,600 for 2022, down 1.3% from where it stands now, while Bank of America reported the index for the year. A decline of 3,333 is projected by the end, which is 8.7%. drop.

main background

The tendency of the market to overperform in the last quarter is the so-called . excited by Santa Claus Rally, A trend where the stock rises in the last five trading days of the year and the first two trading days of the new year. It would be a dramatic correction to reverse a brutal year for the Dow, S&P and Nasdaq, which are all down more than 20% year-over-year and on pace for their worst year since 2008. The stock rallied between June and August, with the Dow up about 15% between mid-June and mid-August, before falling to a 2022 low last month.

tangent line

Worries about potential capital issues at Swiss bank Credit Suisse scared some over the weekend, bringing back unfortunate memories of the impact of Lehman Brothers' bankruptcy on the 2008 financial crisis. However, Citigroup analyst Andrew Combs wrote on Monday Comment He is wary of "drawing parallels with Banks in 2008," confirming "this is not 2008."

Remarkable history of the fourth quarter in the stock market (Forbes,

Recession watch: Economic outlook 'darking' experts worry as Fed could 'break' marketsForbes,

Dow closes in September worst in 20 years, stocks fall as bear market roars ,Forbes,

Credit Suisse reminds stock tank of failure of Lehman Brothers as capital concern: Here's what we knowForbes,

Tesla's Quarterly EV Delivery Jumps 42%—But Miss Bullish ExpectationsForbes,