The stock market closed slightly higher on Monday on general optimism about the reopening of the Chinese economy and the boost it can provide to the global economy. However, the early gains faded as bond yields rose.
advance 16 points, while
rose 0.3% and
Gain 0.4%. While Dow Jones certainly didn’t perform well, most stocks did much better; The Invesco S&P 500 Equal Weight Exchange Traded Fund (RSP), which weighs every stock in the index equally and thus shows the movement of the average stock, gained 0.4%.
The news indicating a decrease in daily cases of Covid-19 in China and that The country opens It should help companies around the world access the supplies needed to meet demand, and it can help lower the cost of those supplies. China was too She mentioned that she is about to complete the security checks on me
(Stock ticker: DIDI), leading to optimism that the country’s regulators will take a less aggressive stance toward tech companies.
Overall, “positive news from China regarding further easing of Covid restrictions along with easing scrutiny of tech companies is helpful. [to stocks]Written by Louis Navilier, Founder of Navellier & Associates.
One reason for the market’s morning gains to moderate in later trading is that the good news from China, which raised hopes about the stock market outlook, also prompted market participants to move away from safe-haven bonds. This lowers bond prices and raises their yields. The 10-year Treasury yield rose to 3.04%, just below the pandemic-era high. The two-year yield rose to 2.72%, just below the pandemic-era high, and up from 2.68% at Friday’s close. Now, markets are looking nervous that the yield could explode, or rise to new heights.
The rise in the two-year yield, specifically, is concerning. It reflects that some of the recent Better than expected economic data It also means that inflation will remain high – and that the Federal Reserve will continue to raise interest rates aggressively.
Higher returns also create another problem: a stronger dollar. The
(DXY), while still below multi-decade highs in early May, is up 0.25%. Global investors are buying dollars as US government bonds become more attractive. But a stronger dollar reduces the total sales of US companies that generate revenue abroad. That’s because sales converted from foreign currencies into dollars are lower when the dollar is stronger.
In line with that, companies that see more of their home sales have been seeing their stocks outperform. The
The index of stocks with a smaller market capitalization was up 0.6%.
Monday’s slight rally in the broader market comes after another tough week for the US stock market. The three major US indexes ended lower this week, with the S&P 500 down 1.6% on Friday. Employment report for the month of May from the Bureau of Labor Statistics It was stronger than expectedWhile wages continued to rise. Together, this means that there is still a good chance that the Fed will continue to raise interest rates aggressively.
Investors will learn more on Friday with the release of inflation data for May. Economists expect the CPI to have risen 8.2% in May from the same month a year ago, which would be lower than the previous 8.3% reading. However, markets would prefer to see inflation fall at a much faster pace.
Like last week, the continuation of any rally in the market hinges on data indicating where inflation is. ‘We need to see more evidence of those ‘keys’ [market] Tom Essaye, founder of Sevens Report Research, wrote that the bottom is becoming more likely for stocks to move materially higher from here. “This means … more evidence that inflation has peaked (Friday’s CPI will be very important) and that the Fed has reached the peak of tightening.”
Here are some stocks on the go on Monday:
(AMZN) started trading after Stock split 20 for 1. Shares are up 2%.
(TSLA) stock is up 1.6% after dropping 9.2% on Friday after the confusion ended The number of Tesla heads Based on comments attributed to CEO Elon Musk.
(TWTR) (TWTR) stock fell 1.5% after that Elon Musk said Twitter is violating its merger agreement With the billionaire, reducing the odds of completing the deal.
The power of the sun
(SPWR) stock rose 2.7%, with
(ENPH) rose 2.9% and 5.4%, respectively after that President Joe Biden said there will be no new tariffs on solar energy imports for two years.
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