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S&P 500 Rallies as Bulls Find Joy in Energy, Financials

Stock MarketsSep 23, 2021 04:12PM ET
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© Reuters.

By Yasin Ebrahim

Investing.com – The S&P 500 closed higher Thursday, as the broader market continued to make up ground on losses earlier this week, underpinned by energy and financials.

The S&P 500 rose 1.2%, the Dow Jones Industrial Average gained 1.5%, or 506 points, the Nasdaq climbed 1.0%.

The positive reaction in the markets suggests that investors "are more comfortable with the possibility of the Fed tapering," said Tyler Ellegard, investment analyst at Gradient Investments, in an interview with Investing.com on Thursday. "The Fed has been buying $120 billion of bonds a month, and its balance sheet has exploded … a monthly taper of $15 billion isn't going to have that big of an effect."

The Federal Reserve signaled it would begin to taper its bond-buying program at its next meeting in November -- should the economic progress continue – and expected to conclude tapering in mid-2022.

Cyclicals stocks led the broader move higher as investor concerns eased about a China-led hit to the global economy from the possible collapse of real estate giant Evergrande. In a move that reassured investors that Beijing would seek to limit the impact of Evergrande’s potential downfall, China's central bank pumped another 120 billion yuan of liquidity into the banking system overnight Thursday.

Financials were pushed by bank stocks, underpinned by rising Treasury yields -- following the Fed's signal for a November taper – with the 10-year yield nearing 1.4%.

Zions Bancorporation (NASDAQ:ZION), SVB Financial (NASDAQ:SIVB), and Lincoln National (NYSE:LNC) led financials higher.

Higher interest rates boost the return on interest that banks earn from their loan products, or net interest margin – the difference between the interest income generated by banks and the amount of interest paid out to depositors.

Reopening stocks – those that benefit from easing pandemic restrictions – were in rally mode, with airlines and cruise companies in the ascendency.

Cruise company Carnival (NYSE:CCL) confirmed that it was on track to resume over 50% of its fleet capacity by October. Its shares rallied more than 4%.

In megacap tech, Apple (NASDAQ:AAPL) added to recent gains as investors talked up the prospect of improved iPhone sales.  

"Based on gauging pre-order activity across the globe to its predecessor iPhone 12 we believe iPhone 13 pre-orders are currently running north of 20% ahead of Apple's launch last year, an impressive start for this latest upgrade cycle out of Cupertino," Wedbush said in a note.

Darden Restaurants (NYSE:DRI), meanwhile, rose 6% after reporting earnings and revenue that topped expectations as same-store sales jumped 47.5% year-on-year.

Salesforce.com (NYSE:CRM) lifted its full-year revenue guidance after reporting quarterly results that exceeded market forecasts. Its shares were up 7%.

On the economic front, initial weekly jobless claims unexpectedly increased by 16,000, missing expectations for a 15,000 decline. Economist suggested the weakness was related to disruptions from Hurricane Ida. 

"Claims were boosted by a combination of relatively unfriendly seasonals and, we think, claims triggered by Hurricane Ida but delayed until after the chaos subsided," Pantheon Macroeconomics said in a note.

The strong day of gains on Wall Street followed a slump earlier this week, which was a buying opportunity as markets are likely to grind higher supported by a healthy amount of investor dollars on the side lines.

"There is about $3-to $4-trillion on the sidelines in money market accounts, so any type of correction that we get -- whether it's 3%, 4%, or 5% -- that cash will be put back to work," Ellegard said. "I think that is what's holding up the market."

S&P 500 Rallies as Bulls Find Joy in Energy, Financials
 

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Comments (10)
Paul Richard
Paul Richard Sep 23, 2021 8:44PM ET
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it will be stretch for sp500 to hit my target of 4500 by end of week but maybe by end of month no problem.
taofeek sharafadeen
taofeek sharafadeen Sep 23, 2021 8:44PM ET
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hry
taofeek sharafadeen
taofeek sharafadeen Sep 23, 2021 8:44PM ET
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how are you doing
Saifullahi Auwal
Saifullahi Auwal Sep 23, 2021 5:50PM ET
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Hello saifullahi
New Jazenevd
New Jazenevd Sep 23, 2021 5:42PM ET
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The market goes to new record highs. Talking about “energy stocks”, aka oil, they still have lot of room to go higher. Oil price goes to triple digits.
Jim Duffy
Jim Duffy Sep 23, 2021 5:40PM ET
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🥂🥂🇺🇲🇺🇲🤫...🖐️
Jim Duffy
Jim Duffy Sep 23, 2021 5:39PM ET
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🥂🥂🇺🇲🇺🇲🤫...🖐️
Max German
MaxiGE Sep 23, 2021 5:38PM ET
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95% of us stocks gained lol manipulation on its best u see earnings coming in alot weaker then expected
Enoch Onyedikachukwu
Enoch Onyedikachukwu Sep 23, 2021 5:26PM ET
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How do i invest ?
Jurgen Daub
Jurgen Daub Sep 23, 2021 5:26PM ET
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gamble
jake goldstein
jake goldstein Sep 23, 2021 5:21PM ET
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Hey folks.Before the criminal 15 years or more ago the market was so easy to trade.If  the economic news was bad stocks went down,if the news was good stocks went up. It was very easy to trade. However since then the market is controlled by the NWO and only they become mega billionaires off of it and the retail guys always loses.
Millennial Metals
Millennial Metals Sep 23, 2021 5:08PM ET
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Bond yields are rising rapidly. RIP housing bubble, tech bubble, everything bubble
Mitchel Pioneer
Mitchel Pioneer Sep 23, 2021 4:51PM ET
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As predicted, the weeks losses miraculously vanish into thin air after 2 days of pure, criminal manipulation.  Now they can twist the financial knife in the back of America on Friday.  Assume the proper position for the weekend America, the US Ponzi Scheme, biggest investment JOKE in the world, is back in form.
Mario tragik
Mario tragik Sep 23, 2021 4:51PM ET
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rinse and repeat time and time again, the media is in it too.
Chris Sundo
Chris Sundo Sep 23, 2021 4:51PM ET
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Seems you can't fit into a system of behavior. Seems you can't play the game. Seems you're upset with yourself for not being able to take advantage of the game. -- Try investing in real estate until you recover your mind. Good Luck
 
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