The S&P 500 added 1.1 per cent, with every sector save energy in the green. The tech-heavy Nasdaq 100 rose 1.6 per cent following its first weekly loss of 2023. The Dow Jones Industrial Average gained the most since January.
Oil prices, a key inflation component, fell on a report that the Biden administration plans to sell more crude oil from the Strategic Petroleum Reserve. West Texas Intermediate crude futures dropped below US$80 a barrel. Equity indexes climbed Monday despite warnings from prominent strategists. JPMorgan Chase & Co.’s Marko Kolanovic said that investors should be in bonds since “a recession is currently not priced into equity markets.” The team led by Morgan Stanley’s Michael Wilson argued that U.S. stocks are ripe for a selloff after prematurely pricing in a pause in Fed rate hikes.
“We’ve strongly believed that the handoff from goods disinflation to services was going to take time and that the Fed would have to remain in restrictive territory to do that,” she said in a phone interview. “And so we’ve maintained a cautious positioning in our portfolios, but we looked to real fundamental catalysts for those relative value trades such as the China reopening.”
But Irene Tunkel, chief U.S. equity strategist at BCA Research, says that concerns about inflation will soon be replaced by concerns about economic growth.