By DAMIAN J. TROIS
NEW YORK (AP) — U.S. stocks surged back from steep morning losses to post gains on Monday, the latest wave of turmoil for Wall Street.
The S&P 500 climbed 24.34 points, or 0.6%, to 4,296.12 after erasing an early loss of 1.7%. Shares of internet-related companies led the way, including Twitter, which jumped 5.7% after agreeing to sell itself to Tesla CEO and tweeter extraordinaire Elon Musk.
The Dow Jones Industrial Average rose 238.06 points, or 0.7%, to 34,049.46 after falling 488 points previously, while the Nasdaq composite rose 165.56, or 1.3% , at 13,004.85 to dominate the market.
Stocks have been fragile recently, with the S&P 500 emerging from a three-week losing streak, amid concerns over rapidly rising interest rates coming from the Federal Reserve as it tries to contain inflation high. Strong earnings reports for the first three months of the year from major US corporations had offered support, but even that looked less solid after some mixed reports and forecasts last week.
Now Wall Street is in the midst of one of the most important periods of the earnings season. Apple, Microsoft, Amazon and parent company Google are all on deck to report this week. And because they are among the largest companies by market value, their movements have the most influence on the S&P 500.
Earlier in the morning, US stocks were on track to follow global markets lower, particularly in China, on fears that strict lockdown measures there could hurt the world’s second-largest economy and potentially hurt global economic growth. Shanghai shares fell 5.1%, while Hong Kong’s Hang Seng fell 3.7%.
China’s capital, Beijing, began mass testing of more than 3 million people on Monday and restricted residents of part of the city to their compounds, raising concerns about a broader lockdown similar to Shanghai. This city has been closed for more than two weeks and this has already prompted the International Monetary Fund to revise downwards its growth forecasts for the Chinese economy.
Concerns are also high for the US economy, which some investors expect to slow sharply or even fall into recession due to steep interest rate hikes the Fed is likely to push through.
Yields on US government bonds fell on Monday, a reversal from the sharp rise in yields this year. The 10-year Treasury yield, which affects rates on mortgages and other consumer loans, fell to 2.82% from 2.90% on Friday evening. It was recently close to its highest level since 2018.
Lower yields tend to benefit high-growth stocks the most, as investors are more willing to pay high prices when they wouldn’t lose much interest if they had bought bonds instead. Gains in several large tech-related stocks were the strongest forces to lift the S&P 500 on Monday, including a 2.4% gain for Microsoft and a 2.9% rise for Class A shares of the Google’s parent company, Alphabet.
Both are expected to release their latest quarterly results on Tuesday.
“Today is definitely a very small bounce, but we’re early in earnings season and the big ones are coming (Tuesday) and later this week,” said Robert Cantwell, portfolio manager at Upholdings.
Besides their bottom line, investors are also looking for a better view of how big companies in technology, manufacturing and retail are handling rising inflation and supply chain issues. .
“The plane is circling the airport,” Cantwell said. “Volatility will be back, make no mistake.”
Inflation remains a major concern for investors. Investors are worried about whether the Fed will be able to raise rates enough to stifle inflation, but not enough to cause a recession. The Federal Reserve Chairman indicated that the central bank may raise short-term interest rates to double the usual amount at upcoming meetings, starting next week. The Fed has already raised its overnight rate once, the first such hike since 2018.
Wall Street will also receive key economic data this week. The Conference Board will release its consumer confidence measure for April on Tuesday. The Commerce Department will release its first-quarter gross domestic product report on Thursday.