S&P 500 Lifted by 95% of Shares as Megacaps Slide: Markets Wrap
(Bloomberg) -- US stocks jumped for a second day, extending the recovery from a sharp drop that reached 10% last week, as industrial and energy shares rallied on economic data that while missing forecasts was able to quell concern about an imminent recession.
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Almost 95% of the companies in the S&P 500 rose, even as most megacaps like Tesla Inc. and Nvidia Corp. got hit. An equal-weighted version of the US equity gauge — one that gives Target Corp. as much clout as Apple Inc. — outperformed. While the latest batch of economic data did little to alter traders’ bets on the path of monetary policy, mixed retail sales brought some relief that consumer spending is not collapsing amid the threat a trade war.
“Corrections that occur within a bull market, tend to be good buying opportunities,” said David Lefkowitz at UBS Global Wealth Management. “The spike in policy uncertainty hit the market at a time when investor positioning and sentiment were quite elevated. But we think a lot of this has now been cleaned up.”
Treasury Secretary Scott Bessent, a former hedge fund manager, said he’s not worried about the recent downturn in equities as the US seeks to reshape its economic policies.
“I’ve been in the investment business for 35 years, and I can tell you that corrections are healthy, they are normal,” Bessent said Sunday on NBC’s Meet The Press. “I‘m not worried about the markets. Over the long term, if we put good tax policy in place, deregulation and energy security, the markets will do great.”
The S&P 500 rose 1%. The Nasdaq 100 rose 1.1%. The Dow Jones Industrial Average rose 1.2%. The Bloomberg Magnificent 7 Total Return Index fell 0.5%. The Russell 2000 Index rose 1.4%.
The yield on 10-year Treasuries was little changed at 4.31%. The Bloomberg Dollar Spot Index fell 0.3%.
To Bret Kenwell at eToro, despite the mixed update on retail sales, the data could give investors some cautious optimism that perhaps we might see a more resilient consumer in the coming months.
“If the consumer can hold up, there’s a good chance the economy can too,” he said.
A sign of stability is emerging after the S&P 500 plunged into a correction last week: Traders are ditching bets that another deep slide is ahead.
Even before the benchmark for US equities rebounded strongly on Friday, the group was largely offloading its S&P 500 hedges. The cost of options protecting against a 10% decline in the SPDR S&P 500 ETF Trust in the next three months plunged to near the lowest level since 2023 relative to contracts that profit from a 10% rally, data compiled by Bloomberg show.
