Stocks Surge As Dollar Index Falls
2:31 pm Friday, September 09th, 2022
Stocks joined gains in riskier corners of the market, with the dollar slumping after a seemingly unstoppable surge that rattled global currencies and stoked fears of more headwinds for Corporate America.
Today’s trade has the stock market enjoying sizable gains fueled by carryover upside momentum from recent sessions. The S&P 500 broke above a key technical level, the 50-day moving average (4,029), which has encouraged buying activity.
Additional factors fueling the positive sentiment include a weakening dollar, leadership from growth stocks after DocuSign (DOCU) and Zscaler (ZS) reported favorable quarterly results, and a recognition that bearish sentiment has reached extreme levels, which is being viewed as a contrarian indicator.
The US Dollar Index is down 0.7% to 108.99.
Today’s rally is broad in nature with advancing issues outpacing declining issues by a 6-to-1 margin at the NYSE and a nearly 3-to-1 margin at the Nasdaq.
Small and mid cap stocks are also coming along for the ride as evidenced by sizable gains in the Russell 2000 (+1.6%) and the S&P Mid Cap 400 (+1.4%).
There’s a risk-on mentality today as the mega cap and growth stocks outperform their peers. The Vanguard Mega Cap Growth ETF (MGK) is up 1.7% versus a 1.1% gain in the Invesco S&P 500 Equal Weight ETF (RSP). The Russell 3000 Growth Index shows a 1.5% gain versus a 1.0% gain in the Russell 3000 Value Index.
S&P 500 sector performance further reflects the risk-on trade. Every sector trades in the green with the defensive-oriented utilities (+0.4%) and consumer staples (+0.7%) showing the slimmest gains. Conversely, the communication services (+2.4%), energy (+2.3%), and information technology (+1.8%) sectors show the biggest gains.
Today’s economic data was limited to the July Wholesale Inventories, which rose 0.6% (Briefing.com consensus 0.8%) after the prior 1.8% increase.
