A trader works on the floor of the New York Stock Exchange (NYSE), January 5, 2023.
andrew kelly | Reuters
Stocks rallied for a second straight session on Monday as traders tried to recoup some of the ground lost in 2022.
The Dow Jones Industrial Average gained 238 points, or 0.7%, while the S&P 500 and the Nasdaq Composite gained 1.3% and 2.1% respectively.
This follows a shortened winning week for all three major indices, with the Dow Jones and S&P 500 posting their best weeks since November. Some of those gains came on Friday, with the Dow Jones gaining 700 points, while the S&P 500 and Nasdaq rose 2.3% and 2.6%, respectively.
Friday’s gains were boosted by the latest batch of economic data. Non-farm payrolls were slightly higher than expected, but wages grew at a slower pace than expected. That, and data showing a contraction in the services sector, bolstered hopes that the central bank’s rate hikes are achieving the intended goal of cooling the economy.
The data helped investors shake off pessimism earlier in the week after the release of minutes from the Fed’s December meeting, in which officials said interest rates are likely to be high for “some time.” time”.
“Even the Fed is starting to signal to the markets that the job is almost done,” said Jamie Cox, managing partner of Harris Financial Group. “It also contributes to the positive aspects of the markets.”
Monday marks the fifth day of trading, reminding investors of a classic Wall Street rule that suggests the market will end the year higher if stocks perform well in the first five sessions. The S&P 500 ended the year positive 83% of the times it ended the first five trading sessions up — and with an average gain of 14%, according to the Stock Trader’s Almanac.
Investors will be watching consumer credit data later today. They will also be watching the December Consumer Price Index report coming out on Thursday and the big banks’ earnings forecast for Friday.