The facade of the New York Stock Exchange, is seen Wednesday, June 16, 2021. Stocks are opening mostly higher on Wall Street, getting the week off to a positive start after the S&P 500 posted its biggest weekly decline since February. The benchmark index was up 0.3% in the first few minutes of trading Monday, June 21. (AP Photo/Richard Drew)
By Damian J. Troise and Stan Choe
Stocks rebounded on Wall Street Monday, clawing back most of their sharp loss from last week, as the initial jolt passes from the Federal Reserve’s reminder that it will eventually offer less help for markets.
The S&P 500 snapped 58.34 points higher, or 1.4%, to 4,224.79 and recovered nearly three-quarters of its worst weekly loss since February. Oil producers, banks and other companies that were hit particularly hard last week led the way.
The Dow Jones Industrial Average gained 586.89, or 1.8%, to 33,876.97, and the Nasdaq composite rose 111.10, or 0.8%, to 14,141.48.
Investors are still figuring all the ramifications of the Fed’s latest meeting on interest-rate policy, where it indicated it may start raising short-term rates by late 2023. That’s earlier than previously thought. The Fed also began talks about slowing programs meant to keep longer-term rates low, an acknowledgment of the strengthening economy and threat of higher inflation.
The market’s immediate reaction to last week’s Fed news was to send stocks lower and interest rates higher. Any shift by the Fed would be a big deal, after investors have feasted on easy conditions with ultra-low rates for more than a year. Higher rates would make stock prices, which have been climbing faster than corporate profits, look even more expensive than they do already.
But it’s not like the Fed said it will jack rates higher off their record low of nearly zero anytime soon.
“If markets are worried about a march back to more normal monetary and fiscal policy as the economy recovers, it will be a very long march,” Barings chief global strategist Christopher Smart said in a note. In the meantime, support from both the Federal Reserve and the U.S. government should continue to help stock prices, even if they do look expensive compared with history, he said.
Companies whose profits are the most closely tied to the economy’s strength and inflation were among the market's strongest on Monday.
Hess, Marathon Oil and Devon Energy all rose at least 6.9% as energy stocks rallied with the price of oil.
Banks were also strong, with Bank of America up 2.5% and Wells Fargo climbing 3.7%.
High-growth companies able to flourish almost regardless of the economy lagged behind, meanwhile. It’s a reversal from last week’s trend, when investors rattled by the Fed piled back into the biggest winners of the pandemic.
Amazon slipped 0.9% Monday, for example, and the lagging performance for tech meant the Nasdaq was trailing other indexes.
Shorter-term yields slipped, and longer-term yields rose in another reversal from last week’s initial reaction to the Fed news.
The two-year Treasury yield dipped to 0.25% from 0.26% late Friday, while the 10-year yield rose to 1.49% from 1.45%.
More bumps may be ahead for markets, which had been mostly quiet for weeks before the Fed's announcement. Fed Chair Jerome Powell will speak before a House subcommittee on Tuesday about the Fed's response to the pandemic.
On Friday, investors will see what the Federal Reserve's preferred gauge for inflation says about May. Prices have been bursting higher across the economy, from airfares to restaurant meals, but the Fed has so far said it expects the big increases to be only temporary. If it proves to be longer lasting, the Fed may have to get much more aggressive about raising rates.
Corporate deals helped lift shares of some companies well beyond the market's gains. Industrial products maker Raven Industries jumped 49.3% on news it is being bought by CNH Industrial. Engineered products company Lydall surged 85.4% on news of its sale to Clearlake Capital-backed Unifrax.
Wall Street’s strong gains followed up on a tumultuous day of trading that preceded it in Asia.
Japan’s Nikkei 225 sank 3.3%, while Hong Kong’s Hang Seng fell 1.1% in the first trading following Wall Street's tumble on Friday. South Korea’s Kospi lost 0.8%, but markets calmed as trading headed westward.
Across Europe, stock indexes made mostly modest gains. Germany’s DAX returned 1%.
The Super Bowl is only a few days away, and the game is currently tracking to be the most expensive one ever.
Gametime, a website and app for last-minute tickets, says the average ticket price for the NFL's championship game is $9,502.50, with the most expensive seats costing nearly $38,000. That's a far cry away from the average ticket price of the first-ever Super Bowl in 1967, which was only $12. The average ticket price increased by more than $8,000 in just the past decade. Matt Rados, Senior Operations Manager at Gametime, joins Cheddar News' Closing Bell to discuss.
Earlier this week, digital investment advisor Betterment announced that it has hired Makara, a company known for its management of cryptocurrency portfolios. Sarah Levy, CEO of Betterment, joins Cheddar News' Closing Bell, where she explains why crypto represents such a promising long-term play and how her company stands to benefit from this latest move.
At-home medical labs company Getlabs raised $20 million in a Series A round, led by Emerson Collective and the Minderoo Foundation. Getlabs aims to be the boots-on-the-ground partner to telehealth. The company says more than 70% of medical decisions still require collecting diagnostic tests in person, and that it fills that void by delivering health care directly to their patients' homes. Founder & CEO of Getlabs Kyle Michelson joined Cheddar News' Closing Bell to discuss.
The White House laid out plans for a $5 billion investment into a national network of charging stations to ease EV driving anxiety. Bruce Brimacombe, CEO of EV infrastructure GOe3 joined Cheddar News to discuss how much needs to be done for drivers to get over the fear of running out of energy. "People need to be able to do what they're doing now," he said. "But that is the way that if you're going to buy an electric car, you got to feel like you're not changing your world." Brimacombe noted that building out the infrastructure between cities was GOe3's own focus.
U.S. automakers are saying that the blockade of the Ambassador Bridge, a crucial border crossing between the U.S. and Canada, is affecting their production lines. Michelle Krebs of Cox Automotive warns that the disruption "couldn't come at a worst time," amid chip and labor shortages in Detroit.
AND DETROIT-BASED AUTO MAKERS SAY THEY ARE SHUTTING DOWN PLANTS OR SCALING BACK PRODUCTION BECAUSE OF PARTS SHORTAGES.
Sonos reported better than expected Q1 earnings amid chip shortage with the release of its Roam product. CFO Brittany Bagley joined Cheddar News to discuss the smart speaker maker's successful report and its plans to hit its 2024 targets as people leave their homes as pandemic restrictions ease. "Even as people head out in the world, it doesn't mean they don't like to listen to music at home or watch a streaming movie at home," she said. "So there's still a real role for us and our products in peoples lives, sort of, no matter what else they're doing."
Lynn Martin, president of the NYSE Group, explains why investors at the New York Stock Exchange should still feel confident despite the recent Wall Street volatility and discusses the landscape for 2022 when it comes to IPOs and retail investors.
The merger of WarnerMedia and Discovery received Justice Department approval on Wednesday, and Patty Hirsch, EVP of consumer and digital platforms at WarnerMedia, joined Cheddar News to discuss current and future offerings from the media conglomerate that will control both HBO Max and Discovery+. "Content really drives so much, and CNN has always had a very long history of creating an incredible documentaries, incredible content … and this service I think is going to ultimately provide the kind of content consumers want and the kind of content that consumers are going are going to pay for," she said. Hirsch also discussed NFTs in use through its Turner Sports and DC brands.
Black entrepreneurs lead the way in the creation of new businesses, but they often cannot get the necessary funding to get their business off the ground. The Fearless Fund is on a mission to change that, and help Black business owners get venture capital. The fund also offers a unique grant program meant to help entrepreneurs with growth, peer coaching, and more, including grants between $10,000 and $20,000. Arian Simone, Co-Founder and General Partner of Fearless Fund, joins Closing Bell to discuss the Fund's mission, how it helps Black entrepreneurs, and more.
