US stocks saw a positive trend for the second consecutive day, bouncing back from a recent 10% drop as industrial and energy sectors surged on economic data that, while falling short of expectations, managed to alleviate concerns of an impending recession.
According to Bloomberg, over 90% of the companies in the S&P 500 experienced gains, overshadowing a decline in most large-cap stocks. An equal-weighted version of the benchmark index, which gives equal importance to all companies regardless of size, rose by 1.3%. Despite the economic data not significantly impacting traders’ outlook on the Federal Reserve’s policies, mixed retail sales figures provided reassurance that consumer spending is holding steady. With a decrease in talk about tariffs, the stock market continued to move away from oversold levels.
David Lefkowitz from UBS Global Wealth Management stated, “Corrections that occur within a bull market tend to be good buying opportunities. The spike in policy uncertainty hit the market when investor sentiment was high, but we believe much of the negativity has now been resolved.”
Morgan Stanley’s Michael Wilson added that sentiment and positioning indicators have improved, and with the arrival of better seasonality in the second half of March, there could be support for a short-term rally led by lower-quality, higher-risk stocks that have experienced significant declines.
However, Wilson cautioned that the likelihood of this rally transitioning into a more sustained period of stability is minimal. He stated, “The more important question is whether such a rally is likely to extend into something more durable and mark the end of the volatility weāve seen year to date. The short answer is, probably not.”
In terms of market performance, the S&P 500 rose by 0.6%, the Nasdaq 100 increased by 0.55%, and the Dow Jones Industrial Average saw a gain of 0.9%. On the other hand, a gauge of the leading megacap stocks dropped by 1.1%, while the Russell 2000 index climbed by 1.2%.
The yield on 10-year Treasuries fell by one basis point to 4.30%, and the Bloomberg Dollar Spot Index decreased by 0.3%. Despite retail sales figures for February coming in lower than expected, the control-group sales, which are crucial for calculating GDP, rose by 1% last month, reversing a prior decline. This led Wells Fargo Investment Institute’s Jennifer Timmerman to comment, “This morningās February retail sales report offers evidence of a limited, modest economic slowdown, rather than signaling a gathering recession.”
Looking ahead, policymakers are expected to assess the impact of President Donald Trump’s trade policies on the economy. The Federal Reserve is anticipated to keep rates unchanged this week, with attention shifting to updated economic projections and Chair Jerome Powell’s press conference for insights into future monetary policy.
Treasury Secretary Scott Bessent, a former hedge fund manager, expressed confidence in the market’s resilience amidst recent turbulence. He emphasized the importance of sound economic policies for long-term market stability, stating, “Corrections are healthy and normal. Iām not worried about the markets. Over the long term, if we put good tax policy in place, deregulation and energy security, the markets will do great.”
In summary, while the market has shown signs of recovery in the short term, uncertainties remain as investors await further economic data and policy decisions. The coming weeks will be crucial in determining the trajectory of the stock market and overall economic stability.
