Stocks Rally, Driven by Bank and Energy Sectors
September 28 2020 - 4:14PM
Dow Jones News
By Anna Isaac and Alexander Osipovich
The Dow Jones Industrial Average rose more than 480 points
Monday, clawing back some lost ground after four consecutive weeks
of declines, as investors piled into economically sensitive stocks
including those of banks and energy companies.
Monday's gains were broad, with 29 of the 30 stocks in the
blue-chip index rising, along with all 11 sectors of the S&P
500. The rally was a welcome relief for investors, who said last
week's selloff was overdone.
JPMorgan Chase and Goldman Sachs Group were both up more than
2.5%, while Chevron climbed more than 3% as investors snapped up
beaten-down stocks outside the high-flying technology sector.
"There's been a lot of froth in markets recently that has been
washed out," said Hani Redha, a portfolio manager at PineBridge
Investments, who said the economy is in the early stages of a
multiyear expansion. "It will remain volatile in the coming weeks,
but overall the trend will remain upward."
The Dow was up 1.7% in afternoon trading. The S&P 500 gained
1.8%, while the tech-heavy Nasdaq Composite climbed 1.7%.
The financial and energy sectors, which tend to be sensitive to
economic trends, were the best-performing sectors of the S&P
500, both rising about 2.5%.
Thomas Hayes, chairman of investment-management firm Great Hill
Capital, said his firm had bought shares of Wells Fargo and other
banks in recent days. He expects such stocks to fare better than
the tech stocks that drove the market's rally from March to
September.
"That's where you're going to outperform, with the things that
have been left behind so far," he said. Cyclical stocks like banks
tend to beat the broader market during recoveries from recessions,
he added.
September has been a turbulent month for stocks, with declines
in tech stocks pulling down major indexes. Apple has dropped 11%
since the start of the month, while Amazon.com has slumped 8.3% and
electric-car maker Tesla has slid 16%.
Even so, such stocks have enjoyed an extraordinary run-up this
year, thanks to profits that have remained resilient during the
coronavirus pandemic and a sense that Big Tech will benefit as more
Americans continue working from home. Apple is up 56% for the year,
while Amazon is up 71%. Tesla's stocks has roughly quintupled in
2020.
Markets have been turbulent in recent weeks due to investors'
concerns about rising or elevated levels of coronavirus infections,
the uneven pace of economic recovery, political risks and tensions
between Beijing and Washington. The Cboe Volatility Index, a
measure of expected swings in the S&P 500, inched higher on
Monday.
Traders are betting on one of the most volatile U.S. election
seasons on record, wagering on unusually large swings in everything
from stocks to currencies. Investors are scooping up a variety of
investments that would pay out if volatility extends far beyond
Election Day itself, concerned that the outcome of the presidential
contest could remain unclear into December.
"It's a very different environment than that we've seen for any
other election," said James McCormick, a strategist at NatWest
Markets. "As an investor, you have to protect yourself because you
just don't know how this is going to swing."
In corporate news, shares of Devon Energy jumped 13% on Monday
after The Wall Street Journal reported and the company later
confirmed a merger agreement with WPX Energy. The move could help
the two companies weather a prolonged industry slump. WPX's stock
rallied 18%.
Uber shares gained 3.8% after the ride-hailing company won an
appeal over the revocation of its operating license in London,
ending for now a yearslong tussle with regulators in one of its
biggest global markets.
Overseas, the pan-continental Stoxx Europe 600 rose 2.2%. In
Asia, most major benchmarks ended the day in positive territory.
Japan's Nikkei 225 Index rose 1.3%, while Hong Kong's Hang Seng
rose 1%.
In bond markets, the yield on the benchmark 10-year Treasury
note inched up to 0.663%, from 0.659% on Friday.
Futures on Brent crude, the global oil benchmark, rose 1.2% to
settle at $42.43.
Write to Anna Isaac at anna.isaac@wsj.com and Alexander
Osipovich at alexander.osipovich@dowjones.com
(END) Dow Jones Newswires
September 28, 2020 15:59 ET (19:59 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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