Stock Traders Buy the Dip in Best Day Since March: Markets Wrap
(Bloomberg) -- Dip buyers emerged a day after a tumultuous trading session, driving U.S. stocks to their biggest advance since March.
The S&P 500 almost erased its Monday’s slide as traders shrugged off concern that the coronavirus resurgence would curtail the economic recovery. Cyclical companies, which got pummeled during the selloff, were the ones leading gains on Tuesday. A gauge of small caps climbed 3%. For several investors, the recent rout was just another buying opportunity in an environment of solid corporate earnings, government stimulus and ultra-easy monetary policy.
“Pretty amazing rebound, really,” said JJ Kinahan, chief market strategist at TD Ameritrade. “That buy-the-dip mentality has played well. It’s like a football coach that runs the same play that keeps working. There’s no reason to change that play. It’s certainly working again.”
In fact, it was during Monday’s selloff that BNY Mellon Wealth Management’s Alicia Levine said she got out her “shopping list.”
Levine said in a Bloomberg TV and Radio interview that she remains “very bullish.” For Bill Callahan, an investment strategist at Schroders, “equities just make sense right now,” and dip buyers will be rewarded as the market continues to grind higher.
On the economic front, data showed U.S. housing starts increased in June by more than forecast, suggesting residential construction is stabilizing despite lingering supply-chain constraints and labor shortages.
After the close of regular trading, Netflix Inc. forecast sluggish subscriber gains for the third quarter, raising concern that the streaming leader’s rapid growth may be ebbing. The shares fell.
Some key events to watch this week:
- European Central Bank rate decision Thursday
- Bank Indonesia rate decision Thursday
- U.S. existing home sales Thursday
- The Tokyo Summer Olympics begin Friday
Here are some of the main market moves:
- The S&P 500 rose 1.5% as of 4 p.m. New York time
- The Nasdaq 100 rose 1.2%
- The Dow Jones Industrial Average rose 1.6%
- The MSCI World index rose 0.9%
- The Russell 2000 Index rose 3%
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.2% to $1.1782
- The British pound fell 0.3% to $1.3631
- The Japanese yen fell 0.3% to 109.84 per dollar
- The yield on 10-year Treasuries advanced three basis points to 1.22%
- Germany’s 10-year yield declined two basis points to -0.41%
- Britain’s 10-year yield was little changed at 0.56%
- West Texas Intermediate crude rose 1.5% to $67.42 a barrel
- Gold futures were little changed
©2021 Bloomberg L.P.