U.S. stocks rose, led by the financial sector, as the S&P 500 pushed away from bear-market territory after flirting with such levels in a volatile trading session Friday, reports the Wall Street Journal. At one point Friday, the S&P 500 slid so far it was on track to close at least 20% below its January peak—what would have been considered a bear market—before regaining ground.
Stock Market Ends Higher After Flirting With Bear Market (Wall Street Journal)
Excerpt from the Wall Street Journal: Monday’s rally gave investors some breathing room. The S&P 500 is now off about 17.2% from its January high. All 11 of the S&P 500’s sectors were up on Monday. Financials fared the best, rising 3.2%. JPMorgan Chase was up 6.2% at $124.60 after offering updated guidance during a presentation on Monday, painting a better picture of economic prospects. The bank said it expects to benefit from loan growth and rising interest rates. "Big picture, the near-term credit outlook, especially for the U.S. consumer, remains strong," said Chief Financial Officer Jeremy Barnum on Monday.
According to MarketWatch, plenty of investors are convinced U.S. stocks are already in a bear market, even if the benchmark S&P 500 has yet to technically confirm it. History indicates that the ferocity of any decline may depend on whether or not the economy averts a recession.
S&P 500 hovers near bear market. Its ferocity may depend on the economy. (MarketWatch)
Excerpt from MarketWatch: That sounds obvious, but the debate over whether the economy is headed for recession remains far from settled. So much may still rest on policy decisions and luck. There’s certainly reason to be nervous. Sam Stovall, chief investment strategist at CFRA, observed in a Monday note that year-over-year increases in inflation that exceed the mean by one standard deviation or more, as is the case now, have been followed by recession. While that’s no guarantee a recession is in store, the record of bear markets during such downturns might leave investors unsettled, Stovall wrote.
After seven straight weeks of losses, Goldman Sachs is just about ready to call a floor on this rout in equities. In the latest weekly note to investor clients, Goldman's chief U.S. equity strategist David J. Kostin sees the S&P 500 finishing the year at 4,300, implying a solid 10.3% rally from Friday's close, according to Fortune.
Goldman Sachs and Bank of America have very different calls for when stocks will hit bottom (Fortune)
Excerpt from Fortune: The glass-half-empty takeaway: Goldman's 4,300 call actually represents a downgrade for the benchmark index, and is smack in line with the bank's worst-case recession forecast. With stocks in free-fall, pushing the Nasdaq into a bear market and the S&P flirting with the dreaded 20% decline, Kostin's team has had to recalibrate their long-held 4,700 year-end forecast. That previous optimistic take by one of the mostly closely watched equities trading teams on Wall Street proved to be untenable with inflation soaring, the Fed tightening and stagflation fears mounting.
UPDATE: U.S. stocks ended sharply higher Friday, with all three major benchmarks booking weekly gains, after the Federal Reserve’s preferred measure of inflation for April had the smallest increase in a year and a half, according to MarketWatch.
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