Stocks rose on Friday as investors sought to move the S&P 500 out of official bear market territory and recover from a week of steep losses.
The Dow Jones Industrial Average rose 189 points, or 0.6%, after rising as high as 545 points as it appeared to break a six-day losing streak. The S&P 500 gained 1.5% and the Nasdaq Composite added 2.8%.
Despite those gains, the major averages were on track to post losses for the week. The Dow is down more than 2% and is currently on track for its first 7-week losing streak since 2001. The S&P 500 is down 2.5% and on track for its longest weekly losing streak since 2011, while that the Nasdaq has fallen about 3% this week.
“Just as trees don’t go up into the sky, prices don’t fall forever,” said Sam Stovall, chief investment strategist at CFRA. “Even in corrections and bear markets that are approaching, they tend to experience relief rallies, which is what the markets seem to be starting today.”
All sectors of the S&P 500 rose on Friday led by gains in consumer discretionary and information technology. It was a broad-based comeback with about 93% of the S&P 500 in the green.
American Express, Nike and Salesforce rose about 3% each, leading the Dow higher.
Battered tech stocks Meta Platforms, Alphabet and Amazon added 3%, while Tesla jumped 6% and Nvidia came up 9%. Apple rose 2.8% after becoming the latest Big Tech name to fall into its own bear market on Thursday.
Following strong gains in the previous session, heavily shorted meme stocks AMC Entertainment and GameStop rose 4.6% and 8.1%, respectively. Carvana started 2% higher.
Meanwhile, shares of Twitter plunged 9.1% after Elon Musk announced a stall on the acquisition deal as he awaits further details on the platform’s fake accounts. In other news, Robinhood jumped 24.8% after crypto CEO Sam Bankman-Fried acquired a stake in the company.
The stock market has been falling for months, starting with high-growth, unprofitable tech stocks late last year and spreading even to companies with healthy cash-flow stocks in recent weeks. The drop has erased much of the quick gains stocks enjoyed from their pandemic lows in March 2020.
“Large deviations from long-term price trends have been used for bubble identification. We found that US stocks have been in a bubble by this metric and are now coming out of it,” Citi strategist Dirk Willer said. in a note to clients on Thursday. .
One reason stocks have struggled in recent months is high inflation and the Federal Reserve’s attempts to contain prices by raising rates. Fed Chairman Jerome Powell told NPR on Thursday that he could not guarantee a “soft landing” that would reduce inflation without causing a recession.
Although stocks enjoyed a two-week rally after the Fed’s first rate hike in March, those gains were quickly erased by a brutal April and the selling continued into May. There are some signs, like investor sentiment surveys and some stabilization in the Treasury market this week, that the market may be close, but many investors and strategists say the market may need to take another big step back. below.
“You’re looking at this market that’s really begging for a bottom, for a relief rally. But, at the end of the day, there really hasn’t been a day of capitulation,” said Andrew Smith, chief investment strategist at Delos Capital. Advisors.
On the earnings front, Affirm shares soared 19% on the back of a better-than-expected earnings report.
Developments in cryptocurrencies have baffled Wall Street this week, with bitcoin falling well below $30,000 and stablecoins struggling to maintain their parity. Bitcoin rallied above the mark on Friday.
On Thursday, the S&P 500 and the Dow Jones bounced off their intraday lows but still fell 0.1% and 0.3%, respectively. The S&P closed down more than 18% from its peak and on the verge of a bear market, while the Nasdaq managed a gain of less than 0.1%.
The tech-heavy Nasdaq is already in a bear market, down more than 29% from its all-time high.