Stocks rallied Monday, following the worst Thanksgiving-week performance in seven years, as oil prices and global equities gained ground, and as U.S. shoppers begin to take advantage of deals offered by retailers on Cyber Monday.
How are the benchmarks performing?
The Dow Jones Industrial Average DJIA, +1.20% surged 366 points, or 1.5%, to 24,650, while the S&P 500 index SPX, +1.17% rose 31.22 points, or 1.4%, to 2,668. The Nasdaq Composite Index COMP, +1.41% rallied 118.45 points, or 1.7%, to 7,058.
On Friday, the Dow Jones Industrial Average fell 178.74 points, or 0.7%, to 24,285.95, the S&P 500 index off 17.37 points, or 0.7%, at 2,632.56, while the Nasdaq Composite Index retreated 33.27 points to 6,938.98, a decline of 0.5%.
Last week, the Nasdaq tumbled 4.3%, the Dow ended the week 4.4% lower, while the S&P 500 notched a week-on-week decline of 3.8%. It marked the worst Thanksgiving week since 2011 for all three U.S. indexes.
What’s driving the market?
Losses for oil prices helped drive stocks lower last week, and the reverse was true for Monday. After losing 7.7% in Friday’s session alone, U.S. crude futures CLF9, +2.56% rose 1.7% to $51.27 a barrel, while Brent crude LCOF9, +2.93% jumped 2.1% to $60.22 on Monday.
Signs that Italy’s coalition government was prepared to cut its budget deficit target — a move that could defuse tensions between Rome and the European Union — also helped buoy sentiment. U.K. Prime Minister Theresa May also walked away from an EU meeting with approval for her Brexit deal.
The retail industry will be in focus Monday, as investors digest initial data on the U.S. consumer’s willingness to spend this holiday season, after shoppers began deal-hunting in earnest following last week’s Thanksgiving holiday.
In-store traffic fell as much as 9% compared with last year’s Black Friday, according to closely watched metrics from RetailNext and ShopperTrak. But consumers made up for it by spending more money online, as internet sales rose by 26.4% from last Wednesday through Friday, according to an estimate by Adobe Systems Inc. Traders will continue to focus on incoming data on spending on today’s Cyber Monday, from retailers and outside analysts.
Meanwhile, the issue of U.S.-China trade tensions continues to loom over the market, in the days leading up to a Group of 20 summit beginning Friday, when President Trump and Chinese President Xi Jinping are expected to meet and discuss trade issues.
Which stocks are in focus?
Shares of Amazon.com Inc. AMZN, +3.96% are up 1.8% in early trade amid forecasts Cyber Monday holiday shopping is expected to generate $7.8 billion in sales this year, a gain of 18% on the previous year, making for the biggest online shopping day in the U.S. ever, according to Adobe Analytics.
Other retailers rising in early trade Monday are GameStop Corp. GME, +7.11% which is up nearly 6.8%, American Eagle Outfitters Inc. AEO, +4.81% rising 4.7%, Best Buy Co Inc. BBY, +2.05% which is up 2.4% and Target Corp. TGT, +1.59% whose stock is rising 1.4%.
Overstock.com Inc. OSTK, -16.26% is one online retailer that is not seeing its shares rise on Cyber Monday, after a Friday report from The Wall Street Journal said that Chief Executive Patrick Byrne expected to wrap up a sale of the company’s retail business by February, in order to fund its blockchain-enabled smart contract trading platform.
That news caused the stock to soar more than 20% on Friday, but the stock was down 15% Monday amid a broad selloff of cryptocurrencies like bitcoin.
Financial stocks are staging a relief rally on Monday, with the sector leading the Dow’s advance Monday morning. Goldman Sach’s Group Inc. GS, +2.59% shares are rising 3.1%, while JPMorgan Chase & Co. JPM, +2.54% stock is up 3%.
Shares of General Motors GM, +6.26% are also in focus, after the car maker announced cost-cutting measures that include layoffs, a reduced vehicle lineup and the closure of U.S. and overseas plants. Shares rose 5.7%.
What are the strategists saying?
“Today we’re seeing an oversold market bounce,” Larry Benedict, chief executive of the Opportunistic Trader told MarketWatch.
“The market is basically flat this year, and we don’t see that changing,” before the end of December, he said. “The market is long in the tooth, and there’s no free money any more,” he said, referring to rising interest rates, which have made less risky investments an attractive alternative to equities.
Paul Hickey, co-founder of Bespoke Market Intelligence cautioned investors to put Monday’s early gains in perspective. “Last Friday the S&P 500 did close at a new low for the current correction, and even with today’s 1% gain at the open, the S&P 500 will only be back to levels it was trading at a half-hour before the close on Wednesday,” he said.
“Traders are on the lookout for signs that fresh concessions will be made before President Trump and China’s President Xi Jinping sit down together later this week, “ said David Lutz, head of ETFs at JonesTrading, in a note to clients, adding that the market “hopes for a strong showing this ‘Cyber Monday’ from online retailers.”
How are other markets trading?
Asian markets traded broadly higher, with Japan’s Nikkei NIK, +0.76% rising 0.7% and Hong Kong’s Hang Seng Index HSI, +1.73% closing the day up 1.7%. Chinese markets were more muted, with the Shanghai SHCOMP, -0.14% up early but ending down 0.1%.
Crude oil CLF9, +2.56% was in rebound mode, up 2.8%, after plunging 7.7% Friday in its biggest one-day fall in more than three years, while gold GCZ8, -0.03% edged higher and the U.S. dollar DXY, +0.07% started the week on a soft note.
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