Stan Cho, Associated Press
14 minutes ago
FILE – The facade of the New York Stock Exchange is shown on Thursday, April 11, 2024 in New York. (AP Photo/Peter Morgan, File)
NEW YORK (AP) — U.S. stocks rose Monday, reversing last week’s losses, the S&P 500’s worst in more than a year.
The S&P 500 rose 0.9%, recovering more than a quarter of last week’s selloff. The Dow Jones Industrial Average rose 253 points, or 0.7%, and the Nasdaq Composite rose 1.1%.
The rally was broad-based, with most stocks across Wall Street rising. In the S&P 500, technology stocks led the recovery from the worst week since the 2020 coronavirus crash.
In the bond market, Nvidia jumped 4.4% and Alphabet rose 1.4% as U.S. Treasury yields stabilized. A sharp rise in yields last week put pressure on stocks seen as the most expensive, making investors wait the longest for big growth.
Bank stocks also performed well following some encouraging profit reports. Trust Financial rose 3.4% after its year-to-date profit beat analysts’ expectations.
That helped offset a 3.4% decline in Tesla Inc., which announced further price cuts over the weekend. Elon Musk’s electric car company, whose stock has already fallen more than 40% this year, is scheduled to report first-quarter results on Tuesday.
It’s typically a big week for earnings reports, with about 30% of S&P 500 companies scheduled to report earnings for the first three months of the year. That includes companies that have surpassed Tesla and Alphabet and become known as members of the Magnificent Seven. This handful of companies accounted for most of the S&P 500’s huge gains last year, raising the bar for expectations to justify stock prices.
Analysts believe earnings per share growth for the group of seven stocks has slowed to 39% from 63% at the end of last year, according to Bank of America strategists. This past quarter may have also been the trough of declining profits among the other 493 companies included in the index.
The gap between the growth rates of the Magnificent Seven and the rest of the S&P 500 index should narrow by the end of the year, strategists Oson Kwon and Savita Subramanian said in a BofA Global Research Report.
Verizon Communications opened this week’s report by disclosing a decline in profits that was not as severe as analysts expected. It cited price increases and other measures to support profits. Verizon stock fell 4.7% after an early rise after the company announced lower-than-expected first-quarter sales and left its full-year profit forecast unchanged.
Overall, the S&P 500 rose 43.37 points to 5,010.60. The Dow rose 253.58 points to $38,239.98, and the Nasdaq rose 169.30 points to $15,451.31.
Companies as a whole are under even more pressure than usual to achieve greater profits and revenues. This is because interest rates, another major factor determining stock prices, are unlikely to be of much use in the short term.
Federal Reserve officials warned last week that it may be necessary to keep interest rates high for some time to ensure inflation falls to its 2% target. This was a huge disappointment for financial markets, ruining hopes that had been building since the Fed earlier indicated there could be three rate cuts this year.
After inflation cooled sharply last year, interest rate cuts appeared to be on the horizon. But a series of reports showing that inflation has remained higher than expected this year have raised concerns that progress could stall.
Concerns about “sticky” inflation are one reason Stifel strategists are urging investors to remain cautious.
Stocks generally look expensive, in part due to Wall Street’s enthusiasm for anything related to artificial intelligence technology. While some analysts have suggested that stocks could continue to rise as enthusiasm around AI continues to grow, Stifel’s Barry Bannister and Thomas Carroll believe that Bitcoin It points to signs that the “speculative frenzy” is ending in the tech industry, including the possibility of prices reaching record highs. They suggest that caution is needed until the third quarter of this year, which runs from July to September.
Bitcoin is still below its all-time high reached a month ago, but it rose on Monday.
In the bond market, the yield on the 10-year U.S. Treasury note fell to 4.61% from 4.63% late Friday. The two-year Treasury yield fell to 4.97% from 4.99%, moving more in line with the Fed’s expectations.
In overseas markets, Hong Kong stock prices rose 1.8% after the People’s Bank of China kept the one-year and five-year loan prime rates unchanged, but stocks in Shanghai fell 0.7%. The People’s Bank of China is trying to assess whether more stimulus is needed after the world’s second-largest economy expanded faster than expected in the first three months of this year, analysts said.
Stock indexes rose across the rest of Asia and much of Europe.
___
AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
