U.S. stocks closed higher Monday as retail shares rallied on expectations of strong sales as shoppers went hunting for deals on Cyber Monday. Stable oil prices and global equities gains also soothed sentiment after a bruising week of losses.
How did the benchmarks fare?
The Dow Jones Industrial Average DJIA, +1.46% climbed 354.29 points, or 1.5%, to 24,640.24, while the S&P 500 index SPX, +1.55% rose 40.89 points, or 1.6%, to 2,673.45. The Nasdaq Composite Index COMP, +2.06% rallied 142.87 points, or 2.1%, to 7,081.85.
Last week, the Nasdaq tumbled 4.3%, the Dow fell 4.4% and the S&P 500 slid 3.8%, marking the worst Thanksgiving week since 2011 for all three indexes.
What drove the market?
Losses for oil prices pushed stocks lower last week, and the reverse was true for Monday. After losing 7.7% in Friday’s session alone, U.S. crude futures CLF9, -0.99% gained more than 2% to trade above $51 a barrel, while Brent crude LCOF9, -0.64% also rose above $60.
The retail industry was in the spotlight as investors digested initial data on consumers’ willingness to spend this holiday season after shoppers began deal-hunting in earnest ahead of the holidays.
In-store traffic fell as much as 9% compared with last year’s Black Friday, according to closely watched metrics from RetailNext and ShopperTrak. But consumers made up for it by spending more money online, as internet sales rose by 26.4% year-over-year from last Wednesday through Friday, according to an estimate by Adobe Systems Inc. Traders will continue to focus on incoming data on spending on today’s Cyber Monday, from retailers and outside analysts.
Global developments also influenced trading. Signs that Italy’s coalition government was prepared to cut its budget deficit target — a move that could defuse tensions between Rome and the European Union — helped too soothe jitters. U.K. Prime Minister Theresa May also walked away from an EU meeting with approval for her Brexit deal and now seeks the approval of her own parliament.
Meanwhile, U.S.-China trade tensions continued to loom over the market ahead of the Group of 20 summit beginning Friday when President Donald Trump and Chinese President Xi Jinping are expected to meet and discuss trade issues.
What were strategists saying?
“Today we’re seeing an oversold market bounce,” Larry Benedict, chief executive of the Opportunistic Trader, told MarketWatch.
“The market is basically flat this year, and we don’t see that changing,” before the end of December, he said. “The [bull] market is long in the tooth, and there’s no free money any more,” he said, referring to rising interest rates.
Paul Hickey, co-founder of Bespoke Market Intelligence, cautioned investors to put Monday’s early gains in perspective. “Last Friday the S&P 500 did close at a new low for the current correction, and even with today’s 1% gain at the open, the S&P 500 will only be back to levels it was trading at a half-hour before the close on Wednesday,” he said.
“Traders are on the lookout for signs that fresh concessions will be made before President Trump and China’s President Xi Jinping sit down together later this week, “ said David Lutz, head of ETFs at Jones Trading, in a note to clients, adding that the market “hopes for a strong showing this ‘Cyber Monday’ from online retailers.”
Which stocks were in focus?
Shares of Amazon.com Inc. AMZN, +5.28% climbed 5.3% amid forecasts that Cyber Monday sales are expected to rise by double digits to $7.8 billion this year, making for the biggest online shopping day in the U.S. ever, according to Adobe Analytics.
Other retailers also closed higher with GameStop Corp. GME, +8.00% up 8%, American Eagle Outfitters Inc. AEO, +5.53% rising 5.5%, Best Buy Co. BBY, +2.86% 2.9% higher and Target Corp. TGT, +2.82% gaining 2.8%.
Overstock.com Inc. OSTK, -16.10% is one online retailer that is not seeing its shares rise after The Wall Street Journal reported that Chief Executive Patrick Byrne expects to wrap up a sale of the company’s retail business by February to fund its blockchain-enabled smart contract trading platform. That news caused the stock to soar more than 20% on Friday, but the stock was down 16% amid a broad selloff of cryptocurrencies like bitcoin.
Shares of General Motors Co. GM, +4.79% advanced 4.8% after the car maker announced cost-cutting measures that included layoffs, a reduced vehicle lineup and the closure of U.S. and Canadian plants.
Financial stocks were among the biggest winners with the sector underpinning the Dow’s advance. Goldman Sachs Group Inc. GS, +2.77% shares rose 2.8% while JPMorgan Chase & Co. JPM, +2.45% stock was up 2.5%.
How did other markets trade?
Asian markets were higher with Japan’s Nikkei NIK, +0.64% rising 0.7% and Hong Kong’s Hang Seng Index HSI, -0.25% closing up 1.7%. Chinese markets were more muted, with the Shanghai SHCOMP, -0.04% up early but ending down 0.1%.
European markets rose with the Stoxx Europe 600 SXXP, +0.01% and the FTSE 100 UKX, +0.07% in positive territory.
Gold GCZ8, -0.16% settled fractionally lower and the U.S. dollar DXY, +0.20% started the week slightly higher.