The Dow (INDU) closed up 641 points, or 2.1%, and was up over 700 points in afternoon trade. S&P 500 (SPX) 2.5 . was up, And the Nasdaq (comp) was also up 2.5%.
The holiday-shortened week turned upside down in Tuesday’s trading as oil prices and other commodities appeared to swing back in price, boosting investor sentiment and hopes that the Federal Reserve will act to rein in inflation without a near-term slowdown. can work for ,
Oil prices edged up slightly on Tuesday, but benchmark Brent crude is now down around $10 from its recent highs. Gas prices have dropped below $5 a gallon, a small relief. Iron ore and copper prices also declined. Meanwhile, President Joe Biden will fly to Saudi Arabia this week to discuss boosting energy production.
Bitcoin bounced back above $21,000 after the cryptocurrency lost less than $18,000 over the weekend. Treasury yields also climbed, with the 10-year yield rising to 3.3%.
Tuesday’s return was broad, with almost all members of the S&P 500 seeing an upward move.
Big jumps are common during bear markets. According to Sam Stovall, chief investment strategist at CFRA Research, the S&P 500 has risen more than 2% on 10 other occasions since its last peak in January, but each time made gains and traded lower.
US stocks rose sharply on Friday, but managed to post big losses last week after the Federal Reserve announced it was the biggest increase in 28 years, by three percent, in an effort to slash inflation rates. – Will increase interest rates by a quarter. Fed Chairman Jerome Powell told Americans on Wednesday he was not sure it would be possible to reduce inflation without affecting the US economy.
“I think what’s becoming more clear is that many factors that we don’t control for are going to play a very important role in deciding whether this is possible or not,” he said.
The S&P 500 lost nearly 6% last week, posting its worst week on record since 2020. The Dow fell 1,504 points, or nearly 5%.
The Fed is in the headlines again this week. Powell will appear before the Senate Banking Committee on Wednesday and the House Financial Services Committee on Thursday as part of his semi-annual testimony to Congress about the Fed’s work. As with little other economic or earnings data, investors will look to his testimony to gauge his sentiment going forward.
The bear market plunged, with US stocks falling more than 20% since hitting record highs on January 3. But there could be a lot of room for a fall in stocks — especially if economists’ predictions come true and the US economy heads into recession.
Recession is not kind to investors. Bear markets during recessions have historically been longer and deeper than bear markets that were not associated with economic downturns, notes Stovall. Since World War II, stocks have fallen 28% in bear markets without recessions — and 36% during recessions.