Wall Street Bounces Back, Dow Scores Best Day Since March

22 Jun 2021 · 3rd Party Analysis

Wall Street Bounces Back, Dow Scores Best Day Since March

WRITTEN BY ThorFX

In Summary

  • Stocks rally as investors renew optimism even if long-term rates rise slightly
  • Dow Jones shoots up nearly 600 points as “reflation” trades are back into play

Stocks on Wall Street went through their sharpest rebound since March after investors adjusted to the Fed’s rate rise outlook. The stock market reversed its steep decline from last week when anxiety about the Federal Reserve’s monetary policy change sent benchmark indexes to their biggest decline since October.

The initial worries that the US central bank would lift rates sooner than planned faded even before the opening bell in New York on Monday. After-hours stock futures turned from significantly negative to sharply positive as market participants stepped back into “reflation” trades amid receding economic growth concerns. Faster recovery and higher prices in the coming months were factored in yesterday’s rally as investors piled into stocks from every sector.

The Dow Jones Industrial Average added 586.89 points, or 1.76%, finishing the session at 33,876.97. The gains propelled the blue-chip average to its best day percentage-wise since March 5. The S&P500 pushed higher by 58.34 points, or 1.40%, to 4,224.79. The broad-based index notched its best day on a percentage basis since May 14. The Nasdaq Composite eked out a gain of 111.10 points, or 0.79%, to a close of 14,141.48, the third-highest close ever for the tech-oriented benchmark.

China’s Crypto Clamp Down Continues

Broadly, investors lifted stocks from consumer staples to energy with all 11 sectors of the S&P500 finishing higher. Banks were among the best performers yesterday. Morgan Stanley rose $1.85, or 2.2%, to $85.94 a share, while Bank of America gained $0.97, or 2.5%, to $39.75 a share. Similarly, Goldman Sachs added $8.71, or 2.5%, to $357.54 a share.

Government bond prices retreated amid the rally inequities. The yield on the 10-year Treasury note climbed to 1.481%, from 1.449% on Friday. The benchmark yield was on a steady drop for five straight weeks through Friday, its longest streak of losses since August 2019.

On the cryptocurrency front, digital assets were under pressure Monday as China has intensified its efforts to clamp down on crypto mining and trading. The price of bitcoin and other major and minor cryptocurrencies slid yesterday after China’s central bank instructed payment companies and banks to restrict cryptocurrency trading.

Bitcoin slid to a two-week low as price approached the $31,000 level. Bitcoin declined nearly 12%, the biggest one-day drop on a percentage basis since the crypto crash in mid-May. Ether dropped, even more, marking a 15% decline on Monday as the price reached $1,890 per coin. Dogecoin slid 27% to about 21 cents in its eighth straight losing session.

Gold and silver staged a mild comeback yesterday after both had dropped steadily for the previous six consecutive trading sessions. Gold advanced 1.1%, or $19, to end the day at $1,783. Silver was up 0.54%, or 14 cents, to close at $25.92.

The European market also experienced a solid boost. All major indexes across Europe finished in the green with the German DAX in the lead, up 1%, or 155.20 points, to 15,603.24. The pan-continental Stoxx Europe 600 added 0.70%, or 3.18, to a close of 455.23 points.

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