Stock Market Rises as S&P 500, Nasdaq Add More Than 6% This Week

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Dow, S&P 500 end their best week since November 2020

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On Friday, new data showed that American households increased spending for the fourth month in a row, although they deepened into savings to do so. Meanwhile, the closely watched US inflation reading turned lower in April. The data, coupled with some strong earnings, showed the retailer’s shares rose sharply. dollar Tree,

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upside down beauty And Ross Stores were among the biggest winners of the week in the S&P 500, gaining at least 20%.

Meanwhile, US consumers appear reluctant to keep high gas prices and travel costs off their Memorial Day weekend plans and are expected to continue to power the economy.

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For months, concerns about high inflation and a Federal Reserve rate hike have weighed in on the market. Investors are worried that a hike in interest rates could push the economy into recession. According to Deutsche Bank, several extended rate-hike cycles in recent decades have eventually led to contraction.

Fears of a worst-case scenario appeared to be easing this week. Stocks continued to rise after minutes of the Fed’s latest meeting, indicating that central bank officials thought they would need to raise interest rates by half a percentage point in each of the next two meetings. Major indices built on those gains later in the week and then rose on Friday, nearing their session highs at the end of the week.

On Friday, the S&P 500 closed at 4158.24, up 100.40 points, or 2.5%. The Dow Jones Industrial Average rose 575.77 points, or 1.8%, to 33212.96. The tech-heavy Nasdaq rose 390.48 points, or 3.3%, to 12131.13.

Some investors said the stock has fallen sharply. A deep selloff has made the valuation more attractive, encouraging some investors to buy the dip.

“People tend to shy away from giving up on a strategy, or strategy, that works great for them,” said Steve Sosnick, chief strategist at Interactive Brokers. “We’ve seen our customers make a whole lot of purchases.”

Nearly $21 billion flowed into global equity funds in the week to Wednesday, the biggest inflow in 10 weeks, according to a BofA Global Research analysis of EPFR data shows.

This week’s rally has offered a respite in what feels like a steady beating of the portfolio. Last week, the Dow industry fell for the eighth week in a row, its longest stretch since 1932, while the Nasdaq Composite, like the S&P 500, posted losses for the seventh week in a row.

Still, few investors and strategists are willing to call the bottom for a sell-off that has caused the S&P 500 to fall nearly 13% for the year. Some traders said the recent gains looked like a short-term rally during a broader decline.

“I think you’re going to see a lot of ‘buy dips’ and ‘sell rips’,” said Stefan Solka, co-founder of Belmont Capital Management.

Year-long turmoil and a strong rally in recent days have some investors wondering: Is the worst over?

Some of the fundamental factors that have caused the stock to fall this year have changed. The Federal Reserve will certainly continue to raise interest rates. Meanwhile, the Kovid-19 lockdown in China and the war in Ukraine have intensified the supply-chain.

“I can’t count the times people asked me: ‘Have I seen the dedication?'” Mr. Sosnik said.

Some of the riskiest bets flourished with the major indices this week. iShares iBoxx $ High Yield Corporate Bond ETF, an exchange-traded fund that tracks high-yield bonds,

This is the longest winning streak for five consecutive sessions since June 2021, according to Dow Jones market data. Meme stocks such as GameStop and AMC Entertainment Holdings have also held higher this week adding 43% and 20%, respectively.

Julian Stauff, founder of hedge-fund firm Stauff Capital in Geneva, Switzerland, said he has created a position that will benefit if the rally continues in the near term, although he doesn’t think the sell-off is over. . He added that volatility in the market has been reducing recently and many investors have already given up on their stock market bets.

“We are bullish right now” in the short term, Mr Stauff said.

For several weeks now, investors have also been analyzing earnings results, many of which have seen huge volatility across the market. Shares of Dell Technologies jumped 13% on Friday after reporting increased profit and a drop in some operating expenses.

While stocks from retailers impressed investors this week, other companies expressed a dismal outlook. Snap executives issued a profit warning on Monday, saying it planned to slow hiring and spending. The company’s shares have fallen 33 per cent this week.

Shares of human resources cloud-software company Workday fell 5.6% on Friday after reporting first-quarter adjusted earnings that fell short of expectations.

And highlights the uncertainty about the economy at the moment in how Americans behave and how they feel about their finances. The University of Michigan Consumer Sentiment Index has fallen to its lowest level since August 2011. High inflation is taking away from Americans’ wallets and raising concerns about a recession, eroding confidence levels.

Concerns remain about economic growth, lowering government bond yields, which were hit earlier in May. The yield on the benchmark 10-year US Treasury note fell to 2.748% on Friday and fell for three consecutive weeks. Yields and prices move in opposite directions.

Oil prices rose 6.1% this week to $119.43 a barrel with international benchmark Brent crude, the best stretch in more than a month.

Overseas, the pan-continental stock Europe 600 gained 1.4%. Hong Kong’s Hang Seng in Asia rose 2.9%. Japan’s Nikkei 225 rose 0.7%. Shanghai Composite rose 0.2%.

Write to Gunjan Banerjee at [email protected] and Caitlin McCabe at [email protected]

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