Stocks open higher after S&P 500’s worst week in two years

US stocks soared, giving investors a reprieve from a recent bout of choppy trading that sent stocks and cryptos tumbling.

The S&P 500 gained 1.6% on Tuesday, while the Dow Jones Industrial Average added 1.4%, or 410 points. The Nasdaq Composite Index jumped 1.7%. The US stock market was closed on Monday for the June 16 public holiday.

Bitcoin rose alongside other cryptocurrencies, continuing to recoup recent losses after a bruising weekend. Bitcoin recently traded at around $21,028, up 2.9% from its value at 5 p.m. ET on Monday, and up around 19% from the recent low of $17,601.58 hit on Saturday. , according to data from CoinDesk.

Investor appetite for riskier assets on Tuesday follows a tumultuous week in markets, sparked by the Federal Reserve’s approval of an interest rate hike of 0.75 percentage points, the largest since 1994. This has prompted investors to scramble to offload riskier assets amid growing fears. that the central bankers will plunge the American economy into a recession. The benchmark S&P 500 index ended the week down 5.8%, its biggest one-week drop in more than two years.

Government leaders and officials have in recent days tried to appease a nation increasingly nervous that an economic slowdown is not guaranteed as central bankers scramble to rein in inflation, which has been high for decades. . President Biden said on Monday he had spoken with Lawrence Summers, a former Treasury secretary, and reiterated that he does not see a recession as inevitable. Federal Reserve Bank of St. Louis President James Bullard also said the economy appears on track for greater expansion this year.

Still, many market watchers are bracing for an economic downturn. In a note on Monday, a team of economists at Goldman Sachs raised its outlook for a U.S. recession, citing concerns that the Fed feels compelled to react forcefully to inflation data, even as economic activity slows down. The team now sees a 30% chance of entering a recession in the next year, up from 15% previously, and a 25% chance of entering a recession in the second year if one is avoided in the first.

Investors and analysts say they expect more difficulties in the markets, although some are still ready to wade in and buy stocks at a discount after a sell-off that sent the S&P 500 down 23% This year. Many pointed to Tuesday’s rally as a rebound from last week’s decline.

“It still looks like a dead cat bounce,” said Viraj Patel, global macro strategist at Vanda Research, referring to a term used to describe a brief market rally. He said investors’ willingness last week to dump stocks in this year’s gaining sectors, including energy and utilities stocks, could be a signal that this year’s pullback has entered its final stages. steps. Still, he said, he thinks the sale “still has some legs to go.”

Tuesday’s bullish mood was accompanied by a sell-off in US government bonds, pushing the yield on US 10-year Treasuries higher. The yield on the reference note traded at 3.292%, down from 3.238% on Friday. Yields and bond prices move in opposite directions.

In individual stocks, gains were spread across many sectors, with tech stocks, tour operators and banks trading higher. Cruise operator Royal Caribbean Group rose 1.3%, while American Airlines Group climbed 1.4%, boosted by expectations of a busy travel season.

Growth stocks, which have been beaten this year, posted gains before the opening bell. Data and software company Palantir Technologies jumped 4%, chipmaker Nvidia gained 3.3% and Tesla added 4.5%. Tech companies Megacap and Netflix each gained 2.4% and 1.3%, respectively.

Kellogg shares jumped 5% after the company announced plans to split into three publicly traded companies.

This week, investors will be watching Fed Chairman Jerome Powell’s testimony before Congress for any further indications of the path of interest rates this year. He is expected to testify Wednesday and Thursday. Data on housing and consumer sentiment are also expected.

For now, Seema Shah, chief strategist at Principal Global Investors, said investors could see value in companies whose stocks have taken a beating this year. However, she said, she expects the market to continue falling once investors begin to see a steady decline in earnings growth.

“I think what you could see is a [modest] rallying through the summer…and as you move into the fall months and the next earnings season, i think a lot of economic data will start to turn and earnings growth will start to turn “, she said. Still, she noted, even now, “the sentiment is deteriorating very quickly.”

Other safe-haven assets fell on Tuesday amid improving investor sentiment. The WSJ Dollar Index, which measures the greenback against a basket of 16 currencies, slipped less than 0.1%. The price of gold fell 0.1% to $1,839.40 per troy ounce.

Traders worked on the floor of the New York Stock Exchange on Thursday.


Spencer Platt/Getty Images

In commodities, oil prices rose. Brent crude, the international benchmark, rose for a second day, climbing 1.3% to $115.57 a barrel. Last week, oil prices fell amid fears that a possible recession could weigh on energy demand.

Overseas, the pancontinental Stoxx Europe 600 index rose 0.5%. In Asia, exchanges were mixed. Hong Kong’s Hang Seng rose 1.9% and Japan’s Nikkei 225 gained 1.8%, while China’s Shanghai Composite lost 0.3%.

Write to Caitlin McCabe at

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