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Dow Racks Up Gains in Broad Rally as Risk Appetite Returns

Stock MarketsJun 21, 2021 04:10PM ET
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© Reuters.

By Yasin Ebrahim

Investing.com – The Dow racked up gains Monday as a sea of green swept across cyclicals and value corners of the market amid a rebound in risk appetite following last week's rout.

The Dow Jones Industrial Average jumped 1.8%, or 586 points, the S&P 500 rose 1.4%, the and the Nasdaq Composite was up 0.79%.

Energy led the broader market higher, up 4% as investors continued to bet on higher oil demand, while the prospect of the return of Iranian supply was pushed out further after Ebrahim Raisi won the country’s presidential election.

Raisi told reporters that Iran wouldn't “negotiate for the sake of negotiations” and ruled out any meeting with President Joe Biden. 

Banking stocks were also among the top gainers, underpinning an advance in the broader financials after a slump last week as U.S. yields rebounded from lows. The United States 10-Year traded near 1.5% after falling as low as 1.35% intraday.

Bank of America (NYSE:BAC) and JPMorgan (NYSE:JPM) were up more than 1%, while Wells Fargo (NYSE:WFC) jumped nearly 4%.

The move higher in value stocks didn't serve up the rotation away from growth as technology also participated in the broader market melt up.

Google-parent Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT, Apple (NASDAQ:AAPL) and Facebook (NASDAQ:FB) were above the flatline, while Amazon.com (NASDAQ:AMZN) was in the red.

The positive swing in investor sentiment on stocks followed the worst week for the broader market since October as the Federal Reserve's hawkish tilt spooked investors. Remarks on Monday, however, continued to show the divide on how soon the Fed should start tightening policy. 

New York Federal Reserve official John Williams (NYSE:WMB), a Fed dove, said Monday it was too soon for the central bank to start tightening policy despite the stronger recovery. "[T]he data and conditions have not progressed enough for the Federal Open Market Committee to shift its monetary policy stance of strong support for the economic recovery," he added. 

That paled in comparison to St. Louis Federal Reserve President James Bullard's remarks Friday. “I put us starting in late 2022,”  St. Louis Federal Reserve President James Bullard said Friday during a TV interview on CNBC. "[M]y forecast said 3% inflation in 2021 -- core PCE inflation -- and 2.5% core PCE inflation in 2022."

But while the expectations for tighter monetary policy measures will weigh on valuations in 2022, companies are expected to generate sufficient earnings to drive the broader market higher.

"We expect earnings to drive returns in 2022. We estimate that earnings per share in the S&P 500 Index will increase to $220 in 2022, though rising interest rates could put downward pressure on price/earnings ratios in 2022," Wells Fargo said in a note.

"Our year-end median price target for the S&P 500 Index is 4,900," it added. That estimated price target represents about 14% upside from current levels.

In other news, DoorDash (NYSE:DASH) climbed more than 3% after teaming up with Albertsons to offer same-day grocery delivery from nearly 2,000 stores.

Dow Racks Up Gains in Broad Rally as Risk Appetite Returns
 

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Comments (15)
Idowu Adewale
Idowu Adewale Jun 22, 2021 3:27AM ET
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splendid
Luu Hung
Luu Hung Jun 21, 2021 8:12PM ET
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Year end target 4900? Lmao
Paul Richard
Paul Richard Jun 21, 2021 8:12PM ET
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4600+ very likely
Edward Lewis
Edward Lewis Jun 21, 2021 7:46PM ET
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Love how the corrupt regime and their MSM-mou.thpieces in unison started using the term "transitory inflation" when Biden took office to gaslight. They call it "transitory" but the USD has lost over 50% of its value since 1990, and it has accelerated this year. This is the type of currency devaluation that is seen in socialist nations as they collapse...makes sense that we are seeing it accelerate under an administration that is trying to spend trillions of dollars every week. I should add that the concerning characteristic compared to past periods of hyperinflation is that interest rates are already near zero. They have been unable to raise interest rates since they used that tactic to save the stock market after 2008, and the US has been unable to achieve a surplus or even balanced budget in 20+ years.
New Jazenevd
New Jazenevd Jun 21, 2021 7:35PM ET
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Money printing supports stock market. It may not support economy much or whatever, however it does support the market. Stay invested.
Mitchel Pioneer
Mitchel Pioneer Jun 21, 2021 7:20PM ET
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It's a miracle that the laughingstock of the financial world "rallied" just enough to cover Friday's loss.  Talk about the most flagrantly manipulated joke on earth.
Stan Smith
Stan Smith Jun 21, 2021 6:47PM ET
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Title should read: 'Dow Racks Up Gains in Broad daylight as FED Returns' :D
Pratt Man
Pratt Man Jun 21, 2021 5:54PM ET
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In 10 years, will the market be higher and lower than today? Roads are jammed, planes are jammed.. an all time number of job openings and 8,000,000 jobs created since trump lost. The sky is the limit now for America.
Joel Schwartz
Joel Schwartz Jun 21, 2021 5:54PM ET
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Well, when the BOJ tried the FED’s current economic policies in Japan it lead to 20 years of stagflation, and that was with them accepting negative interest rates. The USD will lose reserve currency status if we ever adopt negative rates. There are short term and long term debt cycles, and this long term cycle is ending.
Edward Lewis
Edward Lewis Jun 21, 2021 5:42PM ET
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Fed translation: The economy is doing terrible, but if we hyperinflate the currency enough it will make the stock market look good for a while...just do not look at the prices of goods/services and cost of living.
Joel Schwartz
Joel Schwartz Jun 21, 2021 5:42PM ET
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How does the FED’s 2.5% annualized inflation target even make sense when crude oil goes up 1.5-2.0% every single day? They’ve lost their minds.
Stan Smith
Stan Smith Jun 21, 2021 5:27PM ET
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Nothing to do with investor Risk appetite...its all FED contrived. Stop lying!!
Stan Smith
Stan Smith Jun 21, 2021 5:23PM ET
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And just like that..rocketing inflation and last weeks FOMCs warnings are all but forgotten...
Jokers R Us
Jokers R Us Jun 21, 2021 5:09PM ET
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Lol that was quick
Hape Fritt
Hape Fritt Jun 21, 2021 5:09PM ET
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They will bee slap us whenever they want. Know that.
Darryl Allen
Darryl Allen Jun 21, 2021 5:08PM ET
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lmao
christos rousakis
christos rousakis Jun 21, 2021 5:02PM ET
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trifle
Jon Bal
Jon Bal Jun 21, 2021 4:50PM ET
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1.76% a day compounds to 15,200% in a trading year. imma be rich!
Hape Fritt
Hape Fritt Jun 21, 2021 4:50PM ET
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Aawwww Yeah!!! lmao
Mario tragik
Mario tragik Jun 21, 2021 4:24PM ET
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lol what a joke this market is, and these headlines even more.
 
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