On Friday, the Dow Jones Industrial Average climbed by more than 800 points, finally moving past the bear market lows seen last week. This saw it record its first weekly rise after May.
No More Losing Streaks
There was a 2.68% rise in the Dow Jones Industrial Average, which was around 823.32 points and took the index to a close of 31,500.68. The final hour of the trading session saw the gains accelerate. There was a 3.06% increase in the S&P 500 index, which saw it close at 3,911.74. Likewise, an advance of 3.34% was recorded in the Nasdaq Composite, which took it to a value of 11,607.62.
These major indexes resulted in a big comeback for equities in this week. There was an almost 6.5% increase recorded in the S&P 500 this week, while a 7.5% weekly gain was recorded in the Nasdaq Composite for the week. Likewise, the Dow rose by 5.4%.
These moves came after the S&P 500 recorded its worst weekly decline last week after 2020. The broader market index had closed last week down by 5.8%. All three stock indexes were able to end their losing streaks, as market participants were wondering if stocks had hit a bottom. Nonetheless, many on Wall Street are prepared for a gloomier outlook.
Not Going to Last
Analysts are of the opinion that this bounce in US equities is temporary and is not going to last. They said that even though there might be some follow-through in the near term, the immediate market would remain bearish for the next while. They said that risks of recession, as well as a decline in earnings, would drive the next decline in the stock market.
It was consumer sentiment data and the slight easing of expectations associated with inflation resulted in the leap seen in major averages. In June, consumer sentiment reached a record low of 50. While this may not be positive news for the market, investors were pleased to find that inflation expectations for 12 months were easing.
Earlier this month, it was a preliminary reading about inflation expectations that had driven the US Federal Reserve to hike up the interest rate by 75 basis points.
The stock indexes saw a broad-based rally, as 11 sectors recorded gains for the day. The gains in the S&P 500 index were led by cruise line stocks. There was a 12.4% rally in shares of Carnival Corporation after its recent quarter saw booking volumes almost double as opposed to the first quarter. This meant that the company’s booking volumes were at their best levels since the start of the pandemic.
There was also a 15.8% surge in the Royal Caribbean group and a 15.4% gain was also recorded in the shares of Norwegian Cruise Line Holdings. The financial sector also recorded gains, as it was up by 3.8%. Shares of the largest banks in the country also rose after the ‘stress test’ results of the US Federal Reserve were disclosed.