Stocks Rebound From Oversold Zone
2:25 pm Tuesday, June 21st, 2022
A rebound-minded disposition has taken root today. What remains to be seen is if the rebound will grow in stature as this holiday-shortened week progresses.
To be sure, there were a lot of rebound candidates following the losses recorded last week and throughout the month so far. Last week was the worst week for the stock market since March 2020; and, entering today, the major indices were down 9.4-11.7% for June.
Just about everything got caught up in those declines. Similarly, just about everything is coming along for today’s rebound ride even though there have been some unsettling developments, such as interest rates rising, existing home sales declining for the fourth straight month in May, WTI crude futures prices increasing, and Shenzhen and Macau both reportedly dealing with rising COVID cases.
Instead, there has been some headline emphasis on homebuilder Lennar (LEN) posting better-than-expected earnings results, and Kellogg (K) unlocking shareholder value with a plan to split into three independent companies.
There has been a push, too, to favor some of the market’s hardest-hit areas this year. That would include the mega-cap stocks and the semiconductor issues. The Vanguard Mega-Cap Growth ETF (MGK) is up 2.9%, led by Tesla (TSLA), whereas the Philadelphia Semiconductor Index is up 3.3%.
Last week’s worst-performing sector — the energy sector (+5.4%) — is today’s best-performing sector. All 11 S&P 500 sectors are trading higher, with gains ranging from 1.6% (materials) to 5.4% (energy).
The extent of today’s rebound-minded trade is evident in market breadth. Advancers lead decliners by a better than 4-to-1 margin at the NYSE and by a 3-to-1 margin at the Nasdaq.
The 2-yr note yield is up five basis points to 3.23% and the 10-yr note yield is up six basis points to 3.30% ahead of Wednesday’s monetary policy report from Fed Chair Powell before the Senate Banking Committee.
