Stocks continued their recovery from a sharp crash that drove the market down for seven straight weeks, with rebalancing from institutional investors likely to lift stocks at the end of the month.
The S&P 500 erased losses in May and posted its biggest weekly gain since November 2020. Global equity funds saw their biggest inflows in 10 weeks, led by US stocks, according to a Bank of America Corp note citing EPFR data. The Nasdaq 100 outperformed key benchmarks, with Apple and Tesla both up more than four percent. Dell Technologies Inc. Where revenue exceeded estimates. The dollar fell, while Treasuries fluctuated. US markets will be closed on Monday for a holiday.
Volatility has gripped markets this year on fears that hawkish central banks will push the economy into recession, with analysts remaining divided on whether stocks have found a bottom. Morgan Stanley and Bank of America recently said there could be more losses ahead, while BlackRock Investment Institute cut developed market shares to neutral. Meanwhile, strategists at Citigroup Inc. Back in stocks, particularly in Europe and emerging markets, based on their attractive valuations.
“It’s only fair at this point that we start doing some bargaining,” Laurie Calvasina, head of US equity strategy at RBC Capital Markets, told Bloomberg TV. “If I can make people more comfortable in the basic combo going forward, I think stocks are cheap enough to buy. Are valuations a reason to buy on their own? No, not yet.”
Strategists at Credit Suisse Group AG and Bank of America warned that after a significant outperformance against growth stocks this year, valuable stocks are beginning to lose their appeal as bond yields soar and the economic recovery stalls. Value firms have been largely shielded from market sell-offs this year as investors turned to cheaper stocks for shelter amid fears of higher interest rates.
US consumer sentiment deteriorated further in late May to its lowest level in a decade, as rising concerns about inflation dampened the outlook for the economy. A separate report showed inflation-adjusted consumer spending rose in April by the most in three months, indicating that households were resilient in the face of persistent price pressures by indulging in savings.
Some of the main movements in the markets:
- The S&P 500 was up 2.5 percent as of 4 p.m. New York time
- The Nasdaq 100 index rose 3.3 percent
- The Dow Jones Industrial Average rose 1.8 percent
- The MSCI World Index rose 2.2 percent
- The Bloomberg Spot Dollar Index fell 0.3 percent
- The euro was little changed at $1.0733
- The British pound rose 0.2% to $1.2631
- The Japanese yen remained unchanged at 127.12 per dollar
- The yield on the 10-year Treasury bill fell one basis point to 2.74%
- Germany’s 10-year bond yield fell four basis points to 0.96 per cent
- The yield on British 10-year bonds fell by five basis points to 1.92 percent
- West Texas Intermediate crude rose 0.9 percent to $115.14 a barrel
- Gold futures rose 0.2 percent to $1,857.10 an ounce