The stock market stopped its September bleeding Monday, though strategists warned the recent bout of volatility is likely to continue.
“The market has entered a period of directionless volatility,” remarked one strategist.
The Dow Jones Industrial Average rose 430 points, or 1.1%, on pace for its best percentage gain since Aug. 23 by late afternoon, while the S&P 500 and the tech-concentrated Nasdaq rallied 0.9% and 0.7%, respectively, notching each of their best days in September.
The rally followed earlier gains in Europe as the Stoxx 600 jumped 0.8%, and was a broad recovery, with 12 of the benchmark S&P’s 13 sectors in the green.
Even after Monday’s salve, U.S. equities remained down big in September after last week was the worst for stocks in 18 months, with the Dow, S&P and Nasdaq down about 2%, 3% and 5%, respectively.
“The market has entered a period of directionless volatility,” Mark Hackett, Nationwide’s head of investing research, wrote in emailed comments, bemoaning the “rapid shifts between optimism and pessimism.”
Monday’s gains came despite a more than 1% loss from shares of Apple, the world’s most valuable company, after the Silicon Valley giant failed to initially impress investors during the iPhone 16 launch Monday.
The most notable winner Monday was Palantir, whose shares rallied more than 10% to a 3.5-year high as the analytics firm best known for its government contracting swept up in the artificial intelligence revolution was tapped to join the S&P.
BlackRock Investment Institute strategists led by Jean Boivin outlined three major factors behind the stock market swings: “Resurgent recession fears,” routine profit-taking from portfolio managers and “pre-U.S. election jitters,” and Hackett predicted “continued volatility through November.”Stocks remain solidly in the green for 2024, with the S&P up about 15% year-to-date and less than 5% shy of its all-time high, but the market’s footing has apparently thinned in recent weeks as seemingly any breadcrumb of macroeconomic uncertainty has caused selloffs. Investors should get some good news later this month, when the Federal Reserve is expected to lower interest rates for the first time since March 2020.
The next major macroeconomic test for equities will come Wednesday morning, when the government will release August’s consumer price index inflation reading. The market is largely looking for a continued moderation of inflation to bolster growth-friendly interest rate cuts. This week will also feature several key earnings reports, including a release later Monday afternoon from cloud computing colossus Oracle and a Thursday report from Kroger, the largest U.S. grocer by market capitalization.