Wall Street gains over 2% in broad rebound

Jun 22, 2022

By Lewis Krauskopf, Devik Jain and Anisha Sircar

(Reuters) – Wall Street’s major indexes jumped over 2% on Tuesday as investors scooped up shares of megacap growth and energy companies after the stock market swooned last week on worries over a global economic downturn.

All 11 major S&P 500 sectors gained, as stocks rebounded broadly after the benchmark index last week logged its biggest weekly percentage decline since March 2020.

Investors are trying to assess how far stocks can fall as they weigh risks to the economy with the Federal Reserve taking aggressive measures to try to tamp down surging inflation. The S&P 500 earlier this month fell over 20% from its January all-time high, confirming the common definition of a bear market.

“Do I think we have hit bottom? No. I think we are going to see more volatility, I think the bottoming process will likely take some time,” said Kristina Hooper, chief global market strategist at Invesco. “But I do think it is a good sign to see investor interest.”

The Dow Jones Industrial Average rose 641.47 points, or 2.15%, to 30,530.25, and the S&P 500 gained 89.95 points, or 2.45%, at 3,764.79. The Nasdaq Composite added 270.95 points, or 2.51%, at 11,069.30.

The energy sector, the top-gaining S&P 500 sector this year, surged 5.1% after tumbling last week. Every sector gained at least 1%.

Megacap stocks Apple Inc, Tesla Inc and Microsoft Corp all rose solidly to give the biggest individual boosts to the S&P 500. Apple rose 3.3%, Tesla jumped 9.4% and Microsoft added 2.5%.

The Fed last week approved its largest interest rate increase in more than a quarter of a century to stem a surge in inflation.

Investors are pivoting to Fed Chair Jerome Powell’s testimony to the U.S. Senate Banking Committee on Wednesday for clues on future interest rate hikes and his latest views on the economy.

Investors are “trying to read the tea leaves to see how aggressive the Fed is going to get,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. “That’s a hard question to answer right now because they are going to see what happens to the inflation story.”

Meanwhile, Goldman Sachs now expects a 30% chance of the U.S. economy tipping into recession over the next year, up from its previous forecast of 15%.

Graphic: VIX longterm – https://fingfx.thomsonreuters.com/gfx/mkt/zgpomdnwmpd/Pasted%20image%201655826597289.png

In company news, Kellogg Co shares rose about 2% after the breakfast cereal maker said it was splitting into three companies.

Spirit Airlines shares jumped 7.9% after JetBlue Airways said on Monday it sweetened its bid to convince the ultra-low cost carrier to accept its offer over rival Frontier Airlines’ proposal.

Advancing issues outnumbered decliners on the NYSE by a 2.66-to-1 ratio; on Nasdaq, a 2.22-to-1 ratio favored advancers.

The S&P 500 posted one new 52-week high and 32 new lows; the Nasdaq Composite recorded 37 new highs and 122 new lows.

About 12.4 billion shares changed hands in U.S. exchanges, in line with the 12.4 billion daily average over the last 20 sessions.

(Reporting by Lewis Krauskopf in New York, Devik Jain and Anisha Sircar in Bengaluru; Editing by Sriraj Kalluvila, Arun Koyyur and Richard Chang)


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