Stock Market Today: Stock Market Gains Close Out Rough January, Oil Prices Rise

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Shares shot up again on Monday, ending a terrible month on a positive note.

Tech stocks lead Monday’s attack, with the

Nasdaq composite
3.4%. The tech-heavy index is still down about 9% from the month.

The

S&P 500
also tried to climb out of a deep hole. The index rose 1.9%, but was still down 5.3% from the month. It was the index’s worst January since 2009, when it fell 8.6%.

The

Dow Jones Industrial Average
gained 1.2%, bringing the monthly loss to 3.3%. That’s the index’s worst performance in January since 2016, when it fell 5.1%.

Trading has been characterized by intense volatility, with intraday swings as high as 6% last week as traders grappled with the prospect of the Federal Reserve raising interest rates and tightening monetary policy. The central bank is expected to raise interest rates several times this year to avert high inflation. Economists at Citigroup raised their estimate for four rate hikes in 2022 to five in a note published Friday.

On Monday, the 2-year Treasury yield rose to 1.21%, above the pandemic era of 1.19% earlier this month, before slipping back to 1.18%. Yield tries to predict the level of short-term interest rates in the coming years. If it rises, it means the bond market will see more rate hikes coming from the Fed.

Those interest rate hikes could put a dent in economic growth. The S&P 500 is down nearly 7% from its all-time high in January.

But at some point, the bad news is reflected in the market. That’s mainly why stocks had a strong Monday.

That means losses — at the very least — become less severe. This morning started with more benign losses, before the indices moved higher. In recent trading days, the market has risen from its recent lows as more buyers begin to emerge.

The S&P 500 is now trading above the 200-day moving average. That’s a sign that investors haven’t – for now – estimated the Fed-related risks as severe enough to push stocks off their bigger paths.

“Everyone understands that the market is grossly oversold…so some stabilization in stocks or a short-term rally is likely,” wrote Dennis Debusschere, founder of 22VResearch.

Another sign that the stock market is poised to recover – for now – is that the hardest hit stocks are now rising the fastest; it has been a real market reversal.

Small capitalization stocks, whose profits fall more sharply when something slows economic growth, are an example of this. The Russell 2000 Small Business Index fell 22% from its all-time high in early November to Friday’s low, worse than the S&P 500’s 12% drop from its all-time high in January to its all-time low. Since the bottom of Russell’s Friday, it is up about 5%, while the S&P 500 is up about 3%.

The same goes for high-growth stocks that don’t expect a large chunk of their earnings until many years into the future. Rising long-term bond yields, which make future gains less valuable, caused the Russell 2000 Growth Index to plunge from a 29% high in the second half of 2021 to a low on Friday, worse than the 16% drop in its value. counterpart. Since Friday’s bottom, growth is up about 8%, surpassing its appreciation of about 4%.

Next week, Friday’s jobs report will be a highlight. The Fed is closely monitoring employment data as it takes into account higher inflation and monetary policy.

And with earnings season in full swing, earnings will be in the spotlight as well.

Here are five stocks in motion on Monday:

Citrix

(CTXS) shares fell 3.4% as Elliott Management and Vista Equity Partners will buy the cloud computing company for $104 a share. Shares of Citrix closed Friday at $105.55.

More than meat

(BYND) shares gained 15% after a double upgrade.

Tesla

(TSLA) shares rose 11% after an upgrade to Outperform from Neutral at Credit Suisse.

Spotify

(SPOT) shares added 13% after an upgrade to Buy from neutral at Citigroup.

Netflix

(NFLX) shares gained 11% after an upgrade to Buy from Neutral at Citigroup.

Corrections & Reinforcements: The Dow Jones Industrial Average was headed for its worst January since 2016 from the close of trading on Friday. An earlier version of this article erroneously stated that it was headed for the worst January since 2009.

Write to Jacob Sonenshine at [email protected] and Jack Denton at [email protected]