US stocks stormed back from sharp morning losses and posted gains on Monday, the latest round of turmoil for Wall Street.
The S&P 500 climbed 24.34 points, or 0.6 percent, after paring an early 1.7% loss. Shares of internet-related companies helped lead the way, including Twitter, which jumped 5.7 percent after agreeing to sell itself to Tesla CEO and tweeter extraordinaire Elon Musk.
The Dow Jones industrial average rose 238.06 points, or 0.7 percent, after previously falling 488 points, while the Nasdaq Composite rose 165.56, or 1.3 percent, to lead the market.
Stocks have been shaky of late, with the S&P 500 enduring a three-week losing streak amid concerns about the Federal Reserve’s rapid hike in interest rates as it tries to stem high inflation. Strong earnings reports for the first three months of the year from major US companies offered support, but even that looked less solid after some mixed reports and forecasts last week.
Wall Street is now in the middle of one of the most important phases of earnings season. Apple, Microsoft, Amazon and Google’s parent company are all on deck to report this week. And because they’re among the largest companies by market value, their movements have the biggest impact on the S&P 500.
Earlier in the morning, US stocks were on course to follow lower global markets, particularly in China, on fears strict lockdown measures there could hurt the world’s second largest economy and potentially hurt global economic growth. Stocks in Shanghai fell 5.1 percent, while Hong Kong’s Hang Seng fell 3.7 percent.
The S&P 500 fell 0.9 percent and more than 75 percent of stocks in the index lost ground
A storm of inflation fears, the prospect of higher interest rates and a lockdown in Shanghai are weighing heavily on Wall Street
With so many unknowns surrounding the supply chain, China and interest rates, investors seem unsure of which path to take.
“A perfect storm of inflation fears, the prospect of higher interest rates and a lockdown in Shanghai are weighing on sentiment,” David Madden, market analyst at Equiti Capital, told investors.
“This indicates that the S&P 500 is finally catching up with the stock average and entering a bear market,” the investment bank’s analysts reported.
The index fell 6.6 percent last month and 11 percent year-to-date.
Tech stocks on the NASDAQ rallied on the positive side, posting a 0.41 percent gain despite volatile trading.
US stocks are following the downside in global markets, particularly in China, amid concerns that strict lockdown measures there could hurt the world’s second-largest economy
Oil stocks fell on Monday amid fears of more Covid-19 restrictions in China. Chevron’s shares fell 3.8 percent and Exxon Mobil’s fell 5.7 percent.
China’s capital Beijing began mass testing of more than 3 million people on Monday and restricted residents to their properties in one part of the city, sparking concerns about a broader lockdown similar to Shanghai’s.
This city has been under lockdown for more than two weeks, prompting the International Monetary Fund to cut its growth forecast for China’s economy.
Ultrasafe US Treasury bond prices rose as traders avoided risk. The 10-year Treasury yield, which affects interest rates on mortgages and other consumer credit, fell sharply to 2.78% from 2.90% late Friday.
The only good news seemed to be for Elon Musk and those who own shares in Twitter. Shares of the social media platform rose 5.5 percent on Monday, buoyed by news that the electric car and space tycoon is in the final stages of a takeover deal.
Oil stocks suffered on Monday. Chevron shares lost 3.7 percent and Exxon Mobil 5.7 percent
Federal Reserve Jerome Powell forecast inflation to fall by more than 3 percent after the Fed voted to raise interest rates with plans to raise them to 2 percent by the end of 2022
Inflation in the United States hit a new 40-year high of 7.9% in February – another grim sign for consumers
Rising inflation remains a key concern for investors. Investors remain focused on central bank actions to mitigate the impact on businesses and consumers.
The Federal Reserve Chairman has hinted that the central bank could hike short-term interest rates by twice the usual amount at upcoming meetings starting next week. The Fed has already raised interest rates once, the first such hike since 2018.
Investors are in for a tough week of corporate earnings. Reaction to the latest round of corporate reports was mixed, with several disappointing earnings reports last week rocking the market’s mainstay.
Fannie Mae, which sells mortgage-backed securities, is forecasting a “mild” recession in 2023, partly due to the Federal Reserve’s aggressive efforts to curb rising inflation
Beverage giant Coca-Cola was largely unchanged on Monday after reporting strong financial results. Google, Parent, Alphabet and General Motors will release their results Tuesday along with Microsoft and Visa. Boeing, Ford and Facebook parent Meta are on deck to report results on Wednesday.
Thursday is a particularly busy day and will include reports from industry giants Caterpillar, McDonald’s, Amazon and Apple, among others.
Wall Street is also set to get some key economic data this week. The Conference Board will release its measurement of consumer confidence for April on Tuesday. The Commerce Department is due to release its first-quarter gross domestic product report on Thursday.
Fannie Mae economists predict the US will enter a “mild recession” next year as inflation hits a 41-year high of 8.5 percent, and several banks are also expecting the economy to slump.
Goldman Sachs, Bank of America and Deutsche Bank have all predicted a recession marked by lower gross domestic product, falling sales and rising unemployment.