US stocks ended higher on Monday as bank gains and a rebound by megacap market leaders supported a broad-based rally after Wall Street’s longest streak of weekly declines since the dotcom meltdown more than 20 years ago year.
All three major U.S. stock indexes posted solid gains, with the biggest gain provided by the rebound in tech-adjacent growth and technology stocks, including Apple Inc. and Microsoft Corp.
Interest-rate-sensitive banks rose after the biggest US lender, JPMorgan Chase & Co. raised its outlook for interest income for the current year.
Another shoe to drop
“It looks more like a relief rally than a fundamental shift in investor sentiment,” said Oliver Pursche, senior vice president at Wealthspire Advisors in New York. “Investors as a whole have the impression that there is another shoe to drop and they are probably right in the short term.”
On Friday, the S&P 500 closed 18.7% below its closing record reached on January 3. If the benchmark closes 20% or more below this high, it will confirm that it has been in a bear market since then.
Markets have been rocked in recent weeks by concerns over persistently high inflation and the Federal Reserve’s aggressive attempts to contain it as the global economy grapples with the fallout from Russia’s invasion of the Ukraine.
“Today it looks like the market is less fearful of the inflation factor and the Fed can orchestrate a soft landing so to speak,” said Chuck Carlson, managing director of Horizon Investment Services in Hammond, Indiana.
“(But) the bias is still on the downside,” Carlson added.
Market players could have an idea of the Fed’s state of mind when the report of its last political meeting will be published on Wednesday.
A series of economic indicators this week could lend further support to the idea that inflation peaked in March, and also whether high prices have hurt consumers’ purchasing power.
A series of dire warnings from retailers last week, including Walmart Inc and Target Corp, raised such concerns.
According to preliminary data, the S&P 500 gained 71.46 points, or 1.83%, to end at 3,972.82 points, while the Nasdaq Composite gained 182.40 points, or 1.61%, to 11 531.91. The Dow Jones Industrial Average rose 625.10 points, or 2.00%, to 31,887.00.
78% exceeded revenue expectations
The first quarter reporting season is coming to an end, with 474 of the S&P 500 companies reporting results. Of those, 78% exceeded expectations, according to Refinitiv.
Looking ahead, the current quarter’s pre-announcements are generally pessimistic, with 59 negative and 32 positive projections, compared to 37 negative and 52 positive for the year-ago quarter, according to Refinitiv.
Shares of VMWare Inc. jumped following reports over the weekend that chipmaker Broadcom Inc. was in talks to acquire the cloud service provider. Broadcom stock fell on the news.
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