U.S. Stocks Show Substantial Move Back To The Upside

Stocks moved sharply higher in early trading on Monday and continued to turn in a strong performance throughout the session. The major averages all posted strong gains on the day, with the tech-heavy Nasdaq leading the way higher.

The major averages moved roughly sideways in afternoon trading, hovering near their best levels of the day. While the Nasdaq surged 354.41 points or 3.4 percent to 10,675.80, the S&P 500 shot up 94.88 points or 2.7 percent to 3,677.95 and the Dow jumped 550.99 points or 1.9 percent to 30,185.82.

The strong move back to the upside extended recent volatility on Wall Street, as stocks showed wild swings to close out the previous week.

Traders may have looked to pick up stocks at reduced levels following the steep drop seen on Friday, which dragged the Nasdaq down to its lowest closing level in over two years.

An early pullback by treasury yields added to the buying interest, although yields regained ground over the course of the session.

The markets also benefitted from a positive reaction to earnings news from financial giant Bank of America (BAC).

Shares of Bank of America soared by 6.1 percent after the company reported third quarter results that beat expectations on both the top and bottom lines.

Earnings season will continue to pick up in the coming days, as Goldman Sachs (GS), Johnson & Johnson (JNJ), Netflix (NFLX), Procter & Gamble (PG), IBM Corp. (IBM), Tesla (TSLA), AT&T (T) and American Express (AXP) are among the companies due to report their quarterly results.

The strength on Wall Street also came following news the U.K. government is reversing course on previously announced fiscal plans that contributed to turmoil in the global bond markets.

Britain’s new finance minister Jeremy Hunt reversed almost all of the tax measures announced by his predecessor Kwasi Kwarteng in the mini-budget on September 23.

On the U.S. economic front, the Federal Reserve Bank of New York released a report showing regional manufacturing activity has contracted by more than expected in the month of October.

Sector News

Retail stocks turned in some of the market’s best performances on the day, resulting in a 3.7 percent spike by the Dow Jones U.S. Retail Index.

Substantial strength was also visible among interest rate-sensitive commercial real estate stocks, as reflected by the 3.7 percent surge by the Dow Jones U.S. Real Estate Index.

Networking stocks also showed a significant move to the upside, driving the NYSE Arca Networking Index up by 3.3 percent.

Computer hardware, banking and telecom stocks also saw considerable strength amid broad based buying interest on Wall Street.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan’s Nikkei 225 Index slumped by 1.2 percent, while China’s Shanghai Composite Index rose by 0.4 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.’s FTSE 100 Index advanced by 0.9 percent, the German DAX Index and the French CAC 40 Index jumped by 1.7 percent and 1.8 percent, respectively.

In the bond market, treasuries pulled back near the unchanged line after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 4.015 percent after hitting a low of 3.910 percent.

Looking Ahead

Trading on Tuesday may be impacted by reaction to the latest economic data, including reports on industrial production and homebuilder confidence.

Earnings news may also attract attention, with Goldman Sachs, Johnson & Johnson, Hasbro (HAS) and Lockheed Martin (LMT) among the companies due to report their quarterly results before the start of trading.

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