Stocks Extend Rally On Value Buying
5:07 pm Monday, January 31st, 2022
The three main benchmarks all traded higher on Monday at the end of a volatile month for Wall Street, with the tech-heavy Nasdaq flirting with its worst ever start to the year as investors dodged richly valued stocks with aggressive rate hikes on deck.
The gains are being driven by month-end rebalancing activity after a terrible month of January, technical factors with the S&P 500 reclaiming its 200-day moving average (4436), positive-minded analyst recommendations, and a fear of missing out on further rebound gains.
All 11 S&P 500 sectors are trading higher but only four of them are up more than 1.0% — consumer discretionary (+2.8%), information technology (+1.5%), communication services (+1.4%), and utilities (+1.3%). The industrials (+0.3%), financials (+0.4%), health care (+0.1%), and consumer staples (+0.1%) sectors are up modestly.
Tesla (TSLA), Netflix (NFLX), Spotify (SPOT), and Beyond Meat (BYND) are high-profile growth stocks keying off analyst upgrades with gains ranging from 8-15%.
Kellogg (K), on the other hand, is down 3% after the stock was downgraded to Market Perform from Outperform at BMO Capital Mkts. Citrix Systems (CTXS) is a growth stock bucking the positive trend after announcing a deal to go private for $16.5 billion, or $104 per share, in cash.
Interestingly, the Treasury market is bit more reserved than the stock market. Presently, the 2-yr yield is up one basis point to 1.18%, and the 10-yr yield is up one basis point to 1.79%. The U.S. Dollar Index has retraced 0.5% to 96.77 after a strong week last week.
All in all, the market appears steadfast on extending a rebound bid from an oversold condition. For sentiment reasons, it’ll be good if the market can avoid selling into strength, but even if it does, one might suspect that first-of-the-month inflows could be there to support the market tomorrow morning.
The Chicago PMI for January increased to 65.2 (consensus 62.5) from a revised 64.3 (from 63.1) in December.
