Stocks extended their rebound from the lowest levels in over a year as solid outlooks from retailers bolstered confidence in the economy despite supply-chain snags and inflationary pressures.
A drop in US mortgage rates by the most since April 2020 and Broadcom Inc.’s $61 billion acquisition of VMware Inc. also fueled risk appetite. Consumer shares led gains in the S&P 500 as Macy’s Inc. lifted its profit forecast, while deep-discount stores Dollar Tree Inc. and Dollar General Corp. notched their biggest rallies on record amid stronger sales projections. Southwest Airlines Co. and JetBlue Airways Group Inc. surged on bullish revenue estimates. Megacaps Apple Inc. and Tesla Inc. helped push the Nasdaq 100 up almost 3%.
The strong views from retailers provided some relief to investors after behemoths Walmart Inc. and Target Corp. cut their outlooks last week, sparking an industry selloff. US consumers still largely expect the inflationary shock to be temporary, and for price gains to be low and stable in the longer run, according to a report by the Federal Reserve Bank of New York.
“Although this was an expected and highly talked about potential ‘oversold’ rally, the underpinning for today’s market climb higher suggests that last week’s doom and gloom about the all-important US consumer may have been overdone,” said Quincy Krosby, chief equity strategist at LPL Financial.
Here are some key events to watch this week:
- US core PCE price index; personal income and spending; wholesale inventories; University of Michigan consumer sentiment Friday
Some of the main moves in markets:
- The S&P 500 rose 2% as of 4 p.m. New York time
- The Nasdaq 100 rose 2.8%
- The Dow Jones Industrial Average rose 1.6%
- The MSCI World index rose 1.5%
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.4% to $1.0724
- The British pound rose 0.2% to $1.2599
- The Japanese yen rose 0.2% to 127.09 per dollar
- The yield on 10-year Treasuries was little changed at 2.75%
- Germany’s 10-year yield advanced five basis points to 1.00%
- Britain’s 10-year yield advanced six basis points to 1.97%
- West Texas Intermediate crude rose 3.2% to $113.90 a barrel
- Gold futures rose 0.2% to $1,856.20 an ounce
–With assistance from Andreea Papuc, Vildana Hajric and Isabelle Lee.