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Stock traders buy the dip as cyclicals drive rally
Dip buyers emerged a day after a tumultuous trading session, driving stocks to their biggest rally 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 sell-off, were the ones leading gains on Tuesday. A gauge of small caps climbed about 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 sell-off 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” on stocks. 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.
Elsewhere, Bitcoin dropped below $30,000 for the first time in about a month. Some traders view that level as a key support that could open the way to more losses.
Here are some of the main market moves:
– The S&P 500 rose 1.5% as of 4 p.m. EDT
– 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 $1.1781
– The British pound fell 0.3% to $1.3630
– The Japanese yen fell 0.3% to 109.83 per dollar
– The yield on 10-year Treasurys advanced two basis points to 1.21%
– 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
Published : July 21, 2021
By : Syndication Washington Post, Bloomberg · Rita Nazareth, Vildana Hajric