U.S. stocks were up sharply and not far from session highs Monday afternoon, bouncing back from the longest stretch of weekly losses for the Dow Jones Industrial Average since 1932 and a temporary dip by the S&P 500 into bear-market territory last week.
Monday’s gains were credited by some analysts to comments made by President Joe Biden about the prospect of reducing tariffs on China.
How are stocks trading?
The Dow Jones Industrial Average
jumped 638 points, or 2%, to 31,900.
The S&P 500
advanced 70 points, or 1.8%, to 3,971.
The Nasdaq Composite
was up 158 points, or 1.4%, at 11,513.
On Friday, the Dow Jones Industrial Average saw its eighth straight weekly decline, marking its longest losing streak since April 1932, according to Dow Jones Market Data. The S&P 500 and Nasdaq Composite each suffered seven straight weekly losses, their longest losing stretches since March 2001.
What’s driving the markets?
Investors appeared ready to buy a market beaten down by weeks of selling. That was despite reports of surging COVID cases in Beijing, where officials extended an order for students and workers to stay home and will carry out more mass testing in the nation’s second-largest city.
Analysts attributed Monday’s equity gains to President Joe Biden, who said he’s weighing reducing tariffs on Chinese goods that had been imposed during the Trump administration. Biden also said the U.S. would defend Taiwan from aggression by China, though White House officials later said there had been no change to U.S. policy. Washington has long pursued a policy of strategic ambiguity around Taiwan.
“There’s some relief buying and one of the big catalysts for today’s rally is Biden’s remarks, which could represent a major de-escalation of the trade war and really surprised markets,” said Edward Moya, senior market analyst for the Americas at Oanda.
“If we continue to see progress in the easing of tensions between the U.S. and China, that could provide much needed relief to multinationals and traders would be more optimistic with the globalization trade and easing of inflationary pressures,’’ Moya said via phone.
On Friday, the S&P 500 traded below 3,837.25, the level that marks a 20% pullback from its Jan. 3 record close, but managed to eke out a gain. A finish below that level would have confirmed a bear market for the large-cap benchmark.
Significant skepticism remains toward the idea stocks have put in a lasting bottom. Researchers at New York-based BlackRock, the world’s largest asset manager, turned neutral on developed-market stocks like those of the U.S. and said they see no catalyst for a sustained rebound in assets perceived as risky right now.
At Jefferies, Sean Darby, global equity strategy, and others wrote in a note on Monday that their analysis suggests “that, despite investor sentiment surveys being quite bearish, there has not been the cathartic selling that would accompany a market bottom.”
“If we are correct, then the final part of the earnings momentum cycle is a combination of both earnings cuts and a slice in target prices. Investors should be conservatively positioned,” the team at Jefferies wrote.
Appetite for risk weighed on the dollar. The ICE Dollar Index
which measures the greenback against a basket of major currencies, dropped 1%. Oil futures flipped between gains and losses to end virtually unchanged, with the U.S. benchmark
ending a penny higher at $110.29 a barrel. Gold prices
eked out a 0.3% gain, settling at $1,847.80 an ounce.
There is no U.S. economic data on the calendar for Monday, but investors will keep an eye on the World Economic Forum in Davos, Switzerland, which is back after a two-year absence.
What companies are in focus?
Shares of JPMorgan Chase & Co.
rose 7% to lead Dow gainers after the banking giant raised its net interest income outlook. In addition, JPMorgan’s forecast that it may hit its goal of a 17% return on tangible equity this year was one of the most bullish developments coming out of its Investor Day meeting Monday, according to Wells Fargo analyst Mike Mayo.
Shares of fellow Dow component Goldman Sachs Group Inc. GS rose 4% and had been on pace earlier in the day for their largest percent increase since Jan. 6, 2021, according to Dow Jones Market Data. Shares of other banks also got a lift. Bank of America Corp.
and Wells Fargo & Co.
shares rose 6.5% and 5.7%, respectively.
How are other assets trading?
The yield on the 10-year
note was up 6 basis points at 2.85%.
was up 0.4% at $29,375.
—- Barbara Kollmeyer contributed to this article.