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S&P 500, Dow Stocks Jumped on Friday in Comeback Rally Following Steep Losses in the Week
On Friday, every S&P 500 sector closed higher in a comeback rally. These were led by gains in consumer discretionary and information technology, which saw a 4.1% and a 3.4% increase, respectively. The comeback was broad-based as 9 of the S&P 500 ended the session in the green.
Meanwhile, leading the Dow higher are Nike and Salesforce, closing the session with 4.7% and 4.1%, respectively. Both America Express and Boeing saw an increase of over 3% each, which pulled the index up even further.
Even the battered-up tech stocks made a comeback, with Meta Platforms and Alphabet gaining 3.9% and 2.8%, respectively. Tesla went up 5.7%, while Nvidia and AMD saw gains of over 9%. Apple also rose 3.2%, maneuvering itself out of bear market territory.
After seeing strong gains on Thursday, AMC Entertainment and GameStop also jumped 5.5% and 9.9%, respectively.
Meanwhile, Twitter shares went down by 9.7% following Elon Musk’s announcement that his takeover deal was halted as he waited on more details regarding the platform’s fake accounts. On the other hand, Robinhood popped 24.9% following crypto CEO Sam Bankman-Fried’s acquisition of a stake in the company.
For months, the stock market has been slumping. It started late last year with high-growth unprofitable tech stocks, spreading to other companies with healthy cash flow stocks in the last few weeks. This decline has erased a lot of the rapid gains stocks enjoyed off their pandemic lows back in March 2020.
S&P 500, Dow Maneuver Out of Bear Market Territory Following Comeback Rally
So far, both the S&P 500 and Dow managed to avoid bear territory. Although, the rally on Friday doesn’t mean the markets are out o the woods yet, as per LPL Financial’s Ryan Detrick.
“There probably isn’t too much more downside risk in our opinion, but we could have one more whoosh lower,” Detrick said, also saying that on average, bear markets have the dependency to bottom near the 23% to 25% mar when there’s no recession ongoing.
One reason stocks have struggled in the past few months involve high inflation, along with the Federal Reserve’s attempts in containing prices by increasing rates. On Thursday, Fed Chair Jerome Powell told NPR that he couldn’t promise a “soft landing” that brought down inflation without going into recession.
Those stocks had a two-week rally following the Fed’s first rate hike back in March. However, a brutal April managed to erase those gains while May saw the selling continue. Some signs indicate that the market could be near, but many investors and strategists think the market may need to take another significant step down.
“You’re getting this market that really is begging for a bottom, for a relief rally. But, at the end of the day, there really hasn’t been a capitulation day,” chief investment strategist Andrew Smith at Delos Capital Advisors said.
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