Bargain Hunting Contributing To Rally On Wall Street

Bargain Hunting Contributing To Rally On Wall Street

June 28, 2022

Stocks have shown a strong move to the upside in morning trading on Tuesday as traders return to their desks following the long holiday weekend. The major averages have all moved sharply higher after ending last Friday’s extremely volatile session mixed.

Currently, the major averages are just off their highs of the session. The Dow is up 535.34 points or 1.8 percent at 30,424.12, the Nasdaq is up 325.88 points or 3 percent at 11,124.23 and the S&P 500 is up 92.33 points or 2.5 percent at 3,767.17.

The strength on Wall Street comes as traders pick up stocks at relatively reduced levels following recent weakness in the markets.

While the Nasdaq and S&P 500 regained some ground last Friday, the Dow ended the session at its lowest closing level in well over a year.

Bargain hunting has also contributed to strength in the overseas markets that has carried over onto Wall Street early in the session.

Among individual stocks, shares of Valneva (VALN) are skyrocketing after drug giant Pfizer (PFE) agreed to acquire an 8.1 percent stake in the French vaccine maker for $95 million.

Shares of Spirit Airlines (SAVE) are also soaring after JetBlue (JBLU) increased its takeover offer for the discount airline to $33.50 per share.

Electric car maker Tesla (TSLA) has also shown a strong move to the upside after CEO Elon Musk told Bloomberg the company’s salaried workforce would be cut by about 10 percent over the next three months.

Meanwhile, traders have largely shrugged off a report from the National Association of Realtors showing another steep drop in U.S. existing home sales in the month of May.

NAR said existing home sales plunged by 3.4 percent to an annual rate of 5.41 million in May after slumping by 2.6 percent to a revised rate of 5.60 million in April.

Economists had expected existing home sales to tumble by 3.7 percent to a rate of 5.40 million from the 5.61 million originally reported for the previous month.

Energy stocks have helped lead the way higher on the day, benefiting from a rebound by the price of crude oil. Crude for August delivery is currently jumping $2.29 to $110.28 a barrel after plummeting $7.26 to $107.99 a barrel last Friday.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index is up by 5.4 percent, the NYSE Arca Oil Index is up by 5 percent and the NYSE Arca Natural Gas Index is up by 3.4 percent.

Substantial strength has also emerged among semiconductor stocks, as reflected by the 3.5 percent surge by the Philadelphia Semiconductor Index. The index continues to regain ground after hitting its lowest intraday level in over a year last Friday.

Retail stocks are also seeing considerable strength in morning trading, resulting in a 2.9 percent jump by the Dow Jones U.S. Retail Index.

Brokerage, telecom, computer hardware and housing stocks have also shown notable moves to the upside amid broad based buying interest.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Tuesday. Japan’s Nikkei 225 Index and Hong Kong’s Hang Seng Index surged by 1.8 percent and 1.9 percent, respectively, although China’s Shanghai Composite Index bucked the uptrend and dipped by 0.3 percent.

The major European markets have also moved to the upside on the day. While the French CAC 40 Index is up by 0.8 percent, the U.K.’s FTSE 100 Index and the German DAX Index are both up by 0.4 percent.

In the bond market, treasuries are giving back ground after moving notably higher over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.9 basis points at 3.288 percent.

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