U.S. Stocks See Further Upside Amid Renewed Interest Rate Optimism
May 06 2024 - 4:34PM
IH Market News
Stocks showed a strong move to the upside during trading on
Monday, extending the rally seen to close out the previous week.
With the continued advance, the major averages reached their best
closing levels in almost a month.
The Nasdaq and the S&P 500 reached new highs for the session
going into the close of trading, The Nasdaq surged 192.92 points or
1.2 percent to 16,349.25, the S&P 500 jumped 52.95 points or
1.0 percent to 5,180.74 and the Dow climbed 176.59 points or 0.5
percent to 38,862.27.
Stocks continued to benefit from the upward momentum seen over the
two previous sessions, which partly reflected renewed optimism
about the outlook for interest rates.
Relatively dovish comments from Federal Reserve Chair Jerome
Powell combined with weaker-than-expected job growth in April have
largely eliminated short-lived concerns the Fed might actually
consider raising rates.
Investors have instead grown increasingly confident about a rate
cut in the coming months, with the chances rates will be lower by
September now at 83.5 percent, according to CME Group’s FedWatch
Tool.
However, the upward move may have been exaggerated by light
volume, as a lack of major U.S. economic data kepts some traders on
the sidelines.
The economic calendar remains relatively quiet throughout the
week, although a preliminary reading on consumer sentiment in May
might attract some attention along with remarks by several Fed
officials.
Among individual stocks, shares of Bausch + Lomb (NYSE:BLCO)
moved sharply higher on the day after Morgan Stanley upgraded its
rating on the eye care company’s stock to Overweight from Equal
Weight.
Media and entertainment giant Paramount Global (NASDAQ:PARA)
also surged after a report from the New York Times said the company
decided to formally open negotiations with a bidding group led by
Sony Pictures Entertainment and the private equity giant
Apollo.
Meanwhile, shares of Spirit Airlines (NYSE:SAVE) plummeted after
the discount carrier reported a slightly wider than expected first
quarter loss and provided disappointing second quarter revenue
guidance.
Sector News
Semiconductor stocks showed a substantial move to the upside
over the course of the session, driving the Philadelphia
Semiconductor Index up by 2.2 percent to its best closing level in
almost a month.
Considerable strength was also visible among gold stocks, as
reflected by the 2.2 percent surge by the NYSE Arca Gold Bugs
Index.
The rally by gold stocks came amid an increase by the price of
the precious metal, with gold for June delivery climbing $24.20 to
$2,332.80 an ounce.
Computer hardware stocks also saw significant strength on the
day, resulting in a 2.2 percent jump by the NYSE Arca Computer
Hardware Index.
Software, brokerage and housing stocks also showed notable moves
to the upside, moving higher along with most of the other major
sectors.
Other Markets
In overseas trading, stock markets across the Asia-Pacific
region moved mostly higher during trading on Monday, with markets
in Japan and South Korea closed for holidays. China’s Shanghai
Composite Index rallied by 1.2 percent, while Hong Kong’s Hang Seng
Index climbed by 0.6 percent.
The major European markets also moved to the upside on the day.
While the German DAX Index jumped by 1.0 percent, the French CAC 40
Index and the U.K.’s FTSE 100 Index both rose by 0.5 percent.
In the bond market, treasuries showed a lack of direction over
the course of the session before closing roughly flat. As a result,
the yield on the benchmark ten-year note, which moves opposite of
its price, edged down 1.1 basis points to 4.489 percent.
Looking Ahead
Earnings news may drive trading on Tuesday amid another quiet
day on the U.S. economic front, with Disney (DIS) among the
companies due to report their quarterly results before the start of
trading.
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