Markets Close Higher After Recent Fall
3:39 pm Friday, May 13th, 2022
The gains are broad-based with all 11 S&P 500 sectors trading higher between 0.8% (utilities) and 3.9% (consumer discretionary) and advancing issues outpacing declining issues by better than a 5:1 margin at the NYSE and a 4:1 margin at the Nasdaq.
The mega-caps are also pulling their weight, fueling the outperformance of the Nasdaq, and helping the S&P 500 trade back above the 4,000 level.
It’s not just U.S. stocks that are doing well. Foreign equity markets in Asia and Europe closed higher, cryptocurrencies are seeing some much-needed relief, and oil prices ($110.50/bbl, +4.37, +4.1%) continue to rise (although that’s not particularly helpful for sentiment).
Short-covering activity is certainly in the mix, evidenced by huge post-earnings gains in Affirm Holdings (AFRM 23.88, +5.84, +32.4%) and Duolingo (DUOL 93.07, +26.08, +38.7%), but to be fair, there’s also some positive-sounding news that have helped risk sentiment.
Bloomberg reported that Shanghai could soon ease COVID restrictions after saying it hopes to stop COVID-19 community spread by May 20 and that Beijing denied rumors of potential COVID lockdowns. In addition, Fed Chair Powell reiterated yesterday that the Fed is still not thinking about a 75-basis-point rate hike in light of the recent inflation data this week.
Today, import prices for April were unchanged m/m and while export prices did jump 0.6% m/m, at least they were pleasantly revised lower for March (to 4.1% from 4.5%).
The risk-on mindset is being further corroborated by the decline in the CBOE Volatility Index (29.16, -2.61, -8.2%) and the decline in safe-haven assets like gold , Treasuries (10-yr yield is up ten basis points to 2.92%), and the U.S. dollar.
Per usual, there are exceptions. Twitter (TWTR ) is down 8% amid skepticism surrounding Elon Musk’s acquisition of the company. Mr. Musk tweeted that the deal was temporarily on hold, although he later said he was still committed to the acquisition. FIGS (FIGS 9.53, -3.34, -25.9%) has plunged 25% on disappointing earnings news.
Reviewing today’
