Stocks Soar After Selloff On value Buying
2:04 pm Monday, October 17th, 2022
Today’s trade was decidedly positive following Friday’s big retreat. The major averages all enjoy sizable gains thanks to broad buying interest.
The upside moves are fueled by the following catalysts:
New UK Finance Minister Hunt scrapping most of the tax measures from the prior “mini-budget,” which led to a rally in the gilt market and British pound. The 10-yr gilt yield fell 42 basis points to 3.97% and GBP/USD +1.9% to 1.1399
Bank of America (BAC) posted better-than-expected Q3 earnings
Morgan Stanley Chief Strategist Mike Wilson, who has been right this year with his bear market call, said the S&P 500 could potentially get to 4,150 in a technically-oriented rally in the short term if an earnings capitulation or recession can be avoided, according to Bloomberg
Strong mega cap stocks; Morgan Stanley named Apple (AAPL) a top pick in the event of an economic downturn
Many stocks are coming along for the ride with advancing issues leading declining issues by a 7-to-1 margin at the NYSE and a greater than 3-to-1 margin at the Nasdaq. Small and mid cap stocks are keeping pace with their larger peers. The Russell 2000 (+3.1%) and S&P Mid Cap 400 (+2.9%) both enjoy nice gains.
Every S&P 500 sector trades in positive territory led by consumer discretionary (+4.3%) and real estate (+3.7%). Meanwhile, defensive-oriented sectors, consumer staples (+1.2%) and health care (+1.7%), show the slimmest gains.
Falling Treasury yields are another supporting factor for today’s rally. The 10-yr note yield dropped to 3.91% earlier and is now down two basis points to 3.99%. The 2-yr note yield, which hit 4.40% earlier, is down five basis points to 4.44%.
Economic data was limited to the October Empire State Manufacturing Survey, which came in at -9.1 versus the prior reading of -1.5. A number below 0.0 is indicative of a contraction in manufacturing activity in the New York Fed region.
