Wall Street’s three major indexes rebounded on Monday with broad-based gains as investors regained some confidence after US equities’ biggest weekly drop in two years, but strategists stopped short of calling an end to the market pullback.
The announcement of US President Donald Trump’s budget, including an infrastructure spending plan, helped sectors such as S&P materials and industrials.
But the bigger factor was likely the S&P’s test and rebound from a key technical level on Friday when it briefly fell 11.8 per cent from its January 26 record and below its 200-day moving average during that session, according to strategists.
‘Investors probably were mulling things over the weekend and concluded that the economy is fairly strong, earnings are holding up, so there’s no particular reason to panic or sell. So some money probably came back into the market,’ said John Carey, portfolio manager at Amundi Pioneer Asset Management in Boston.
The Dow Jones Industrial Average rose 410.37 points, or 1.7 per cent, to 24,601.27, the S&P 500 gained 36.45 points, or 1.39 per cent, to 2,656 and the Nasdaq Composite added 107.47 points, or 1.56 per cent, to 6,981.96.
Michael Purves, chief global strategist at Weeden & Co in New York, said Monday’s move showed ‘big, fast, money saying, ‘Wait a second, buy this dip.”
‘You test the key support level and go back and test it again, which is what we did on Friday,’ he said.
But while last week’s panic selling appeared to be done, strategists were not calling an end to the pullback. The S&P still closed 7.6 per cent below its January 26 record closing high. It confirmed a correction on Thursday, when it dropped 10 per cent below the record.
The S&P’s biggest boosts from single stocks came from Apple Inc, which rose 4 per cent, and Amazon.com, which ended up 3.5 per cent.