US stocks staged a late comeback on Monday, with the S&P 500 and Nasdaq Composite making fresh yearly lows before closing for the day.
The Nasdaq Composite was up 1.63% to 12,536.02, while the S&P 500 was up 0.57% to 4,155.38. The Dow Jones Industrial Average gained 84.29 points, or 0.26%, to close at 33,061.50. The Dow fell more than 400 points from session lows.
The wild trading session followed a rough April for stocks. The Dow and S&P 500 have had their worst month since March 2020, when the pandemic took hold. The Nasdaq had its worst month since 2008.
David Katz, chief investment officer at Matrix Asset Advisors, told CNBC’s The Exchange that the market is overly concerned about an economic slowdown and investors should step in to buy the fall in stocks.
“You can buy a lot of great companies at very attractive prices. Historically, that was a very good time to invest money,” Katz said.
However, other market strategists warned of a possible short-lived recovery rally, pointing to the new lows as a sign stocks need to fall further.
“Sentiment is negative, but we still haven’t seen a flush. We almost had to see at least one break of those lows to see more fear in the market, more stop levels triggered,” said Keith Lerner, Co-CIO at Trusted Advisory Services.
“In a way, as much as most techs want to see support, I think you almost have to see it [break] to get a more durable ground.”
Tech was a particular soft spot in April but the group led Monday’s recovery. Netflix and Facebook’s meta platforms were up 4.8% and 5.3%, respectively. Microsoft and Google parent Alphabet each gained more than 2%.
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Apple and Amazon closed down less than 1% after spending much of the session in negative territory. UBS’s Art Cashin said on CNBC’s “Squawk on the Street” that Apple’s and Amazon’s trading in particular could be a barometer of what’s next for the broader market.
Semiconductor and energy stocks were two strong areas on Monday. Intel and Chevron rose 3.1% and 2%, respectively, to support the Dow.
Volatility in the bond market likely contributed to the swings in stocks on Monday. The 10-year Treasury yield rose above 3% for the first time since 2018.
“3% is certainly important. … It’s a psychological barrier that makes people concerned about what the Fed is going to do,” said Miller Tabak’s Matt Maley.
Investors are eyeing Wednesday when the Federal Open Market Committee is due to issue a statement on monetary policy. The decision will be released at 2 p.m. ET, with Federal Reserve Chair Jerome Powell holding a press conference at 2:30 p.m
“With inflation this high and earnings growth slowing rapidly, equities no longer offer the inflation protection that many investors are counting on. Real earnings return tends to lead real stock returns on a y/y basis by about 6 months compared to the index level when investors figure this out,” Morgan Stanley equity strategist Michael Wilson said in a note to clients.
Another key economic indicator will come out on Friday when the April jobs report is released.
– CNBC’s Michael Bloom and Patti Domm contributed to this report.