Shares jumped on Friday, reducing losses from another downtrend and preventing the S&P 500 from falling into bear market territory.
The Dow Jones industrial average rose 466.36 points to 32,196.66 points or 1.47%. The S&P 500 gained 2.39% to close at 4,023.89 points and the Nasdaq Composite jumped 3.82% to 11,805.
The S&P 500 on Friday completed its best day since May 4, while the Nasdaq recorded the strongest daily rise since November 2020.
Despite gains on Friday, the main averages lost for the week, with the Dow closing 2.14% and marking its first 7-week streak since 2001. The S&P 500 fell 2.4% to the biggest weekly loss since 2011, while the Nasdaq fell 2.8%.
“As trees do not climb into the sky, prices do not fall forever,” said Sam Stovall, chief investment strategist at CFRA. “Even in corrections and approaching bear markets, they tend to experience a rally of relief, something that markets seem to be starting today.”
All sectors of the S&P 500 closed higher on Friday, driven by gains in consumer discretion and information technology, which rose 4.1% and 3.4%, respectively. It was a broad-based comeback with about 95% of the S&P 500 ending the session in the green.
Nike and Salesforce closed up 4.7% and 4.1%, leading the Dow higher. American Express and Boeing each added more than 3%, further raising the index.
Lost tech stocks also returned as Meta Platforms and Alphabet gained 3.9% and 2.8%, respectively. Tesla jumped 5.7% while battered semiconductors Nvidia and AMD also rose more than 9%. Apple rose 3.2%, leading itself out of the bear market.
After strong gains on Thursday, the shares of AMC Entertainment and GameStop mimics with heavy shorts rose 5.5% and 9.9%, respectively.
Meanwhile, Twitter shares plunged 9.7% after Elon Musk announced the termination of the acquisition agreement as he expects more details about the fake accounts of the platform. In other news, Robinhood rose 24.9% after cryptocurrency CEO Sam Bankman-Fried acquired a stake in the company.
The stock market has been slumping for months, starting with high-yield tech stocks late last year and spreading even to companies with healthy cash flow shares in recent weeks. The downturn has wiped out much of the rapid gains in equities from their pandemic lows in March 2020.
So far, the S&P 500 and the Dow have avoided bear territory, but Friday’s rally does not mean the markets are still out, said Ryan Detrick of LPL Financial.
“We probably do not have a much higher risk of falling in our opinion, but we could have an even lower one,” he said, adding that bear markets on average tend to fall around 23% to 25% when there is no recession.
One reason stocks have struggled in recent months is high inflation and the Federal Reserve’s efforts to keep prices down by raising interest rates. Fed Chairman Jerome Powell told NPR on Thursday that he could not guarantee a “gentle landing” that would reduce inflation without causing a recession.
Although stocks rallied two weeks after the Fed’s first rate hike in March, those gains were quickly erased by a brutal April and sales resumed in May. There is some evidence, such as investment climate research and some stabilization in the government market this week, that the market may be close, but many investors and analysts say the market may need to take another important step down. .
“You’re getting this market that is really begging for a bottom, for a relief rally. But, at the end of the day, it was not really a day of capitulation,” said Andrew Smith, Delos Capital’s chief investment strategist. Consultants.