Nasdaq outperforms 3%, Dow jumps 400 points in rally after heavy losses earlier in the week

Stocks jumped on Friday, paring losses from another bear week and preventing the S&P 500 from slipping into bear market territory.

The Dow Jones Industrial Average rose 466.36 points to 32,196.66 points, or 1.47%. The S&P 500 rose 2.39% to close at 4023.89 and the Nasdaq Composite jumped 3.82% to 11805.

Friday’s S&P 500 ended its best day since May 4, while the Nasdaq posted its strongest one-day gain since November 2020.

Despite Friday’s gains, the major averages posted losses for the week, with the Dow closing down 2.14% and posting its first 7-week streak of losses since 2001. The S&P fell 2.4% and hit its longest streak of weekly losses in a year 2011, while the Standard & Poor’s 500 Index fell 2.4%. The Nasdaq fell 2.8 percent.

“Just as trees don’t go up in the sky, prices don’t go down forever,” said Sam Stovall, chief investment analyst at CFRA. “Even in corrections and getting close to bear markets, they tend to experience rallies in relief, which is what the markets seem to be starting with today.”

All S&P 500 sectors closed higher on Friday led by gains in consumer discretion and information technology, which added 4.1% and 3.4%, respectively. It was a broad-based comeback with about 95% of the S&P 500 ending the session in the green.

Nike and Salesforce closed 4.7% and 4.1% higher, sending the Dow up. American Express and Boeing added more than 3% each, sending the index up.

Shares of technology company Beaten-up also made a comeback, with Meta Platforms and Alphabet shares up 3.9% and 2.8%, respectively. Tesla jumped 5.7% while Nvidia and AMD semiconductors jumped more than 9%. Apple stock rose 3.2%, extricating itself from bear market territory.

After strong gains on Thursday, Meme’s severely shortened stocks AMC Entertainment and GameStop shares jumped 5.5% and 9.9%, respectively.

In the meantime, Twitter shares tumbled 9.7% after Elon Musk’s announcement The takeover deal is on hold as more details about the platform’s fake accounts are awaited. In other news, Robinhood is up 24.9% next Crypto CEO Sam Bankman-Fried has taken a stake in the company.

The stock market has been in decline for months, starting with high-growth, unprofitable tech stocks late last year and even spreading to companies with healthy cash flows in recent weeks. The drop wiped out much of the rapid gains that stocks had enjoyed from pandemic lows in March 2020.

So far, the S&P 500 and the Dow have avoided a bear zone but Friday’s rally does not mean that markets are out of the danger zone yet, said Ryan Dettrick of LBL Financial.

“There probably won’t be much downside risk in our view but we could have another lower risk,” he said, adding that bear markets on average tend to bottom around the 23% to 25% mark when there is no recession.

One reason stocks have suffered in recent months is high inflation, and the Federal Reserve’s attempts to contain prices by raising interest rates. Federal Reserve Chairman Jerome Powell told NPR on Thursday that It cannot guarantee a “smooth landing”.“That lowered inflation without causing a recession.

Although stocks enjoyed a two-week rally after the Fed first raised rates in March, those gains quickly fizzled out through a brutal April and selling continued into May. There are some signs, such as investor sentiment surveys and some stability in the Treasury market this week, that the market may be soon, but many investors and strategists say the market may need to take another big step.

said Andrew Smith, senior investment analyst at Delos Capital Advisors.