Wall Street ends sharply higher, buying current after a catastrophic month

The Dow Jones climbed 2.66%, the Nasdaq advanced 2.27% and the broader S&P 500 index rose 2.59%.

The New York Stock Exchange ended sharply higher, warmed by hedging, bargain-hunting and some semblance of early-quarter momentum after a disastrous September.

The Dow Jones gained 2.66%, the Nasdaq index gained 2.27% and the broader S&P 500 index rose 2.59%.

“There has been no good news to support this rebound, only the absence of bad news,” commented Andy Kapyrin of Regent Atlantic. “That was enough to let the market get back to its footing.”

The three major Wall Street indexes had all finished at the lowest of the year on Friday.

Adam Sarhan of 50 Park Investments said “everyone who wanted to sell last week sold,” prompting investors who had recently bet lower on Monday to hedge by repositioning themselves long.

These speculative operators were joined by investors interested in discounted stocks, who embarked on a hunt for bargains. “And finally, you have the investors sensitive to large movements who have come on board”, according to Mr. Sarhan.

For once, it was the industry giants and the so-called defensive stocks, theoretically less sensitive to the economic situation, which were the big winners of the session, from Honeywell (+3.64%) to Boeing (+4.10%), via Dow (+3.07%).

In the bargain department, Intel (+4.66%), Nike (+2.74%) and Disney (+2.97%) have put their noses out the window.

As for several months, equities and bonds once again moved together.

“It’s the start of a month, a start of a quarter, you have investors who want to come back to the market and change their allocation” of assets, whether to stocks or bonds, Mr. Sarhan said.

Yields, which move in the opposite direction of bond prices, eased significantly on Monday. The yield on 10-year US government bonds thus stood at 3.64%, against 3.82% on Friday.

For Mazen Issa, of TD Securities, this drop in bond rates was also linked to the publication of two US macroeconomic indicators deemed disappointing.

The ISM index of activity in the manufacturing sector fell to 50.9% in September, against 52.0% expected, the slowest pace of progress for the economy since May 2020, at the start of the coronavirus pandemic.

As for construction spending in the United States, it fell 0.7% in August compared to July, significantly less than the 0.2% decline expected by economists.

For the TD Securities analyst, these bad figures maintain the hope that the American central bank (Fed) will not further accelerate its monetary tightening.

The decline in interest rates and cheap purchases also played a role for technology stocks such as Apple (+3.08%), Microsoft (+3.37%) and Alphabet (+3.28%).

For Mr. Sarhan, the surge on Monday does not announce a series on a market which remains generally oriented downwards. “The strongest movements” on a session “occur on + bear markets +”, that is to say devastated markets, argued the manager.

Tesla suffered (-8.61% to $242.40) after reporting Sunday that vehicle deliveries were up but below expectations in the third quarter. The electric car manufacturer also acknowledged that it was experiencing difficulties in transporting its vehicles.

The oil sector has been propelled by news reports of a possible substantial production cut by the Organization of the Petroleum Exporting Countries (OPEC) and its OPEC+ deal allies, which meet on Wednesday.

ExxonMobil (+5.28%), Chevron (+5.61%), Halliburton (+7.15%) and Marathon Oil (+10.58%) were all celebrating.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.