April 17, 2024

Investors Hope Toward Better Policy, Stocks Gain

Stocks in the US rose as the market opened on Tuesday. Wall Street is hoping to extend the moment gained from the previous trading session.

Wall Street Breaths Better

Stocks connected with the S&P 500 index increased by 1.7% while the Dow gained 1.4%. Nasdaq contracts went up by over 2% on the day.

The stock market began the new month on a good note after a rough September. The major averages performed well on Monday. The S&P 500 increased by 2.6% on Monday to see its best trade since July.

The Dow index also saw a 2.7% increase to its largest single-day profit since June. Nasdaq equally had a 2.3% gain in the same session.

The S&P 500 is said to scarcely rally beyond 2% when market conditions are unstressed. This came from DataTrek research’s Nicholas Colas. He suggested that Monday’s gain indicated fragility and not power.

For instance, there were fewer than four such days from 2013 to 2019. But 2022 has witnessed 14 of them thus far.

Colas stated that history has shown that Monday’s rally was not healthy. The 2.6% gain was not a sign that the S&P index scaled through. He noted that a policy shift is needed to reduce the volatility seen this year.

Colas continued by saying the market is predicting a change in the Fed’s policy. Although there is not much success due to the stubborn inflation. 

The UN Sounds Warning

Reports from the ISM revealed that activities dropped to the barest since 2020. It aided a dovish optimism around the Feds’ trajectory. 

Also joining to give hope is a report from the UN warning against a recession. The UN report cautioned central banks against continuous rate hikes to stave off stagflation. The aggressive monetary policy will also affect developing economies.

The report said excessive policy tightening might cause a long period of stagflation. It might also create a ripple effect of economic instability.

Bonds and stocks staged a rally on Tuesday. Treasury yields fell for the second consecutive day. The ten-year bills fell to about 3.5% after they topped 2008 4% high.

Some shares rallied to see a bright day. Rivian gained up 8% after the company committed to producing 25,000 electric cars this year. 

Poshmark also rose by 12% after news said it would be acquired by Naver Corp. The acquisition deal is said to be valued near $1.2 billion.

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