NEW YORK—Wall Street rallied Monday to claw back almost all the losses from its slow start to the year.
The S&P 500 jumped 1.4 percent to pull within 0.7 percent of its all-time high set two years ago. It’s a return of momentum for Wall Street’s main measure of health, which was coming off its first losing week in the last 10.
The Nasdaq composite shot 2.2 percent higher for its best day in eight weeks, and the Dow Jones Industrial Average lagged the market with a more modest gain of 0.6 percent, or 216 points.
Boeing dragged on the Dow in its first trading after one of its jets suffered an inflight blowout over Oregon. It fell 8 percent. Spirit AeroSystems, which builds fuselages and other parts for Boeing, lost 11.1 percent.
Stocks of oil-and-gas companies were also heavy weights after Saudi Arabia gave indications of potentially weak demand for crude. Exxon Mobil fell 1.7 percent, and Marathon Oil lost 2.7 percent as a barrel of U.S. crude tumbled $3.04 to $70.77.
But the rest of Wall Street largely climbed as easing Treasury yields relaxed the pressure on the stock market.
Big Tech stocks led the way. They were the main reason for Wall Street’s big gains last year, when excitement around artificial-intelligence technology made just a handful responsible for most of the S&P 500’s returns. But they stumbled last week as markets broadly regressed.
Nvidia rose 6.4 percent after announcing several AI-related products. Apple, meanwhile, rose 2.4 percent to bounce back from its worst week since September. They were the strongest forces lifting the S&P 500, along with Microsoft, Amazon and Alphabet.
Commercial Metals also jumped 7.5 percent after reporting stronger profit for the latest quarter than analysts expected. It said construction activity is healthy in North America, driving demand for steel and helping to offset weaker conditions in Europe.
More earnings results will be arriving at the end of the week. Delta Air Lines, JPMorgan Chase and UnitedHealth Group will be among the companies kicking off the S&P 500’s reporting season on Friday for the final three months of 2023.
The highlight of the week may be Thursday’s release of the latest inflation data for U.S. consumers. A cooldown there has ignited hope on Wall Street that the Federal Reserve will soon see enough improvement to not only halt its hikes to interest rates but to begin cutting them.
The Fed has already hiked its main interest rate to the highest level since 2001, which grinds down on the economy and hurts prices for investments, in hopes of conquering high inflation. The Fed said last month it has seen improvement, and Wall Street’s expectation is for it start cutting rates as soon as March.
Treasury yields have already sunk in the bond market on such expectations, and they edged lower Monday. The yield on the 10-year Treasury fell to 4.01 percent from 4.05 percent late Friday. It was above 5 percent in October, at its highest point since 2007 and putting sharp downward pressure on the stock market.
The powerful resulting rally for stocks has caused some on Wall Street to say at least a pause is likely in the near term. The market looks “extremely expensive,” according to Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management.
Critics also warn traders may be too optimistic about how deeply the Federal Reserve may cut rates this year. The Fed has indicated a potential for three cuts, but many traders are anticipating at least six. That large a number may not be likely unless a recession forces the Fed’s hand, critics say.
That’s why much focus is on corporate profits, where growth could help prop up stock prices.
Analysts expect companies in the S&P 500 to report growth of 1.3 percent in earnings per share for the fourth quarter of 2023, according to FactSet. That’s a relatively meager number, but it would mark just a second straight quarter of growth.
Helen of Troy, the company behind such brands as Hydro Flask, Osprey, and Drybar, rose 4.5 percent after reporting stronger profit for its latest quarter than analysts expected. Incoming CEO Noel Geoffroy said the company did better than it had expected despite “what continues to be a challenging macro consumer environment.”
Elsewhere on Wall Street, some of the fallout from the weekend’s blowout of a Boeing jet flown by Alaska Airlines waned through the day. Alaska Air Group ended just 0.2 percent lower after falling sharply earlier. United Airlines, which flies the same Boeing model and also had to cancel flights due to its grounding, opened lower but finished with a gain of 2.8 percent.
All told, the S&P 500 rose 66.30 points to 4,763.54. The Dow gained 216.90 to 37,683.01, and the Nasdaq jumped 319.70 to 14,843.77.
In stock markets abroad, indexes were mixed. Hong Kong’s Hang Seng sank 1.9 percent, led by losses for property and technology shares, while stocks fell 1.4 percent in Shanghai.
Property shares tumbled after Zhongzhi Enterprise Group, a major lender to real estate developers, filed for bankruptcy in Beijing. China also announced sanctions Sunday against five American defense-related companies in response to U.S. arms sales to Taiwan and U.S sanctions on Chinese companies and individuals.
