The S&P 500 index rose for the second day in a row, extending its recovery from a sharp 10% drop last week. Industrial and energy stocks led the way, supported by economic data that, although falling short of forecasts, helped ease concerns about an imminent recession.
Market Overview: Broad Gains Amid Megacap Struggles
More than 90% of the companies in the S&P 500 saw gains, outpacing declines in most megacap stocks. An equal-weighted version of the S&P 500, which treats all companies equally, climbed 1.3%. This move came after economic data reassured investors that consumer spending is not collapsing, despite mixed retail sales figures. While the outlook for the Federal Reserve remained largely unchanged, the relief from tariff concerns helped push equities away from oversold levels.
Positive Sentiment Amid Market Corrections
David Lefkowitz from UBS Global Wealth Management noted that corrections in a bull market often present good buying opportunities. He added that while recent policy uncertainty had impacted the market, much of the excess negativity has now been addressed.
Michael Wilson of Morgan Stanley emphasized that sentiment and positioning have improved significantly. With the second half of March typically showing stronger seasonality, a short-term rally could be supported by lower-quality, higher-beta stocks, which have seen the most significant declines.
However, Wilson remained cautious, stating, “The more important question is whether such a rally is likely to extend into something more durable and mark the end of the volatility we’ve seen year to date. The short answer is, probably not.”
Market Indexes Perform Well
- The S&P 500 gained 0.6%.
- The Nasdaq 100 rose 0.55%.
- The Dow Jones Industrial Average added 0.9%.
- A measure of the seven largest tech stocks fell by 1.1%.
- The Russell 2000 index, which tracks smaller companies, climbed 1.2%.
Treasury Yields and the Dollar Index
The yield on 10-year US Treasuries fell by one basis point to 4.30%. Meanwhile, the Bloomberg Dollar Spot Index dropped by 0.3%.
Retail Sales Show Modest Economic Slowdown
US retail sales in February came in below expectations, and the prior month’s data was revised downward. However, the control-group sales, which are used to calculate goods spending for GDP, increased by 1%, signaling a recovery from previous declines.
Jennifer Timmerman of Wells Fargo Investment Institute commented, “This morning’s February retail sales report offers evidence of a limited, modest economic slowdown, rather than signaling a gathering recession.”
Policymakers and the Impact of Trade Policies
Policymakers are expected to adopt a wait-and-see approach as they assess the economic effects of Donald Trump’s trade policies. With the Federal Reserve meeting on Wednesday, attention will be on officials’ updated economic projections and Chair Jerome Powell’s press conference, which may offer insights into the central bank’s future moves.
Treasury Secretary’s Optimism on Market Corrections
Treasury Secretary Scott Bessent expressed confidence that the recent downturn in equities is not a cause for concern. “I’ve been in the investment business for 35 years, and I can tell you that corrections are healthy, they are normal,” he said on NBC’s Meet The Press. “I’m not worried about the markets. Over the long term, if we put good tax policy in place, deregulation and energy security, the markets will do great.”
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