Wall Street closed sharply higher, based on technical buying, without conviction

Posted on Tuesday, June 21, 2022 at 10:58 pm

The New York Stock Exchange closed sharply higher on Tuesday, as last week’s sharp decline caused a pullback, but pessimism still prevailed.

The Dow Jones rose 2.15% to 30530.25 points, the tech-heavy Nasdaq rose 2.51% to 11069.30 points, and the broader S&P 500 gained 2.45% at 3,764.79 points.

Whatever metric you’re looking at, the market has fallen too low and it’s time for a rebound,” said Quincy Crosby of LBL Financial.

For the analyst, the move was underlined by operators who bet on a drop in indices and had to buy back to cover themselves.

The VIX index, which measures market volatility, fell slightly, reflecting a slight increase in risk appetite.

The impression is also found in the bond market, where less safe assets, especially stocks, have been abandoned.

The yield on 10-year government bonds, which is moving in the opposite direction to their prices, rose to 3.28% from 3.22% on Friday (Monday was a public holiday in the US).

The indices were driven by the largest ratings ratings, from Apple (+3.28%) to Alphabet (+4.11%), via Tesla (+9.35%), Amazon (+2.32%) or Microsoft (+2.46%).

Only Meta stood out (-4.09% to $157.05), while the group reached an amicable agreement with the US Department of Justice. Facebook has been accused of offering advertisers a choice of who can see their ads, particularly according to racial, social and religious criteria.

“The question is, is this throwback the right one?” , according to Quincy Krosby, referring to a potential market restart, which would have bottomed out.

Judging by trading volume on Tuesday, one of the lowest levels since the beginning of the year, the day after a public holiday, the conviction is lacking and few investors are returning to the market.

Quincy Crosby asked: “Do people really want to take a risk now, not knowing whether the Fed (the US central bank) is going to lead us into a recession or American companies will lower their forecasts?”

In a speech on Tuesday, Tom Parkin, president of the Federal Reserve’s branch in Richmond, Virginia, defended the logic of a US central bank slowdown, which is “returning to normal” for the economy, while believing that a recession could have been averted.

Wall Street will be watching Federal Reserve Chair Jerome Powell’s hearings Wednesday before the Senate Banking Committee and on Thursday before the House Financial Services Committee.

Quincy Crosby in particular anticipates pressing questions from elected members of the House of Representatives about “what aggressive stance” by the Federal Reserve, in the midst of accelerating monetary tightening, “will have consequences for the average American.”

In the stock market, American Spirit Airlines (+7.94% to $22.97) was moved by an increase in the takeover offer of its rival JetBlue (-1.64%), from $31.50 to $33.50, which roughly values ​​the company. $3.64 billion. Shareholders will have to decide, at the general meeting on June 30, between a merger with another company, Frontier, or an acquisition by JetBlue.

Wall Street welcomed Kellogg’s decision (+1.95% to $68.86) to split into three separate companies to boost growth of its herbal products business, which is considered the most promising. The Battle Creek (Michigan) group will also create a company that reassembles grain in North America, and the third includes the rest of Kellogg’s activities.

Shares of DocuSign, which specializes in electronic signature contracts, fell 1.65% to $59.55 after announcing the departure of its general manager Dan Springer.

Supported by an increase in the recommendation of Credit Suisse analysts, as well as a rise in oil prices, Exxon Mobil (+6.22% to $91.48) offered with, in its wake, most of the sector’s values, from Chevron (+4.19%) to Marathon Oil (3.11%).

After a very sensitive week that saw bitcoin drop below $20,000 on Saturday, the crypto sector benefited from a slight bounce in cryptocurrencies, such as Coinbase (+12.24%), Riot Blockhain (+9.46%) or Block (+3.44%). .

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