In a strong start to the trading week, U.S. stock markets made a significant rebound as investors prepared for a pivotal period filled with major events. The Dow Jones Industrial Average soared by 325 points, marking a 1% increase, while the S&P 500 witnessed a 1.1% gain, and the Nasdaq Composite surged by 1.5%.
A positive Momentum for S&P 500
The stock market rally was impressively broad-based, with all 11 sectors of the S&P 500 experiencing positive momentum. Particularly, sectors such as communications services, consumer discretionary, and information technology stood out with outstanding performance. Notably, mega-cap technology stocks, including Amazon and Meta Platforms, each saw a more than 3% increase in their shares.
One standout contributor to the stock market’s surge was SoFi Technologies, which enjoyed a notable 3% increase following its robust third-quarter revenue results. The company also raised its full-year outlook, further boosting investor confidence.
Challenging times
This resurgence comes on the heels of a challenging period, with the S&P 500 recently entering a correction phase. Last week, the index experienced a 2.5% dip, bringing it down by over 10% from its closing high in 2023. Furthermore, the index faced a 3.2% decline in October, potentially setting the stage for its third consecutive negative month, a streak not seen since the onset of the pandemic in 2020.
This week will be historic for the stock market
Analysts and experts are closely monitoring the situation, with some predicting a stock market bounce back due to factors like a less-hawkish Federal Reserve and the market adapting to increased Treasury liquidity needs. Christopher Harvey, Head of Equity Strategy at Wells Fargo Securities, commented on this potential market shift, suggesting an “oversold bounce” driven by these factors.
Wait for the rate decisions
All eyes are now fixed on the Federal Reserve’s upcoming rate decision, scheduled for Wednesday. The central bank is widely anticipated to maintain its benchmark interest rate at the current level. As rising interest rates have been a major factor contributing to the recent stock market correction, investors are hoping for a signal from the Fed that it may cease raising rates, at least for the remainder of 2023.
Notable Highlights from this week
The 10-year Treasury yield, which surpassed 5% at the beginning of the previous week, stood at around 4.9% on Monday. This adjustment is being closely observed by investors. Additionally, the eagerly awaited October jobs report, set for release on Friday, could be a determining factor. Many hope to see signs of the labor market slowing, which would potentially provide the Federal Reserve with the confidence to maintain their current rates for the rest of the year.
The week is also highlighted by Apple’s earnings report, scheduled for Thursday after the market’s closing bell. The tech giant, the largest member of the S&P 500, is currently in correction territory, with a 15% drop from its 52-week high. This report is eagerly awaited by investors and could significantly impact market sentiment and direction in the days ahead.
