Stocks Rally Across the Board in Month-End Rebound: Markets Wrap

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(Bloomberg) — Stocks continued to rebound from a steep selloff that drove the market to near-oversold levels, with rebalancing from institutional investors potentially lifting equities at the end of the month.

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All major groups in the S&P 500 rose, with the gauge poised to halt its longest weekly slide since 2001. Global stock funds saw their biggest inflows in 10 weeks, led by US shares, according to a Bank of America Corp.’s note citing EPFR data. The Nasdaq 100 outpaced major benchmarks, with Apple Inc. and Tesla Inc. up at least 3%. Dell Technologies Inc. surged as revenue topped estimates. The dollar fell, while Treasuries fluctuated. US markets will be closed Monday for a holiday.

Volatility gripped markets this year on fears that hawkish central banks will tip the economy into a recession, with analysts remaining split on whether equities have found a bottom. Morgan Stanley and Bank of America recently said there may be more losses to come, while BlackRock Investment Institute cut developed-market shares to neutral. Meantime, Citigroup Inc. strategists recommended stepping back into stocks, particularly in Europe and emerging markets, on their appealing valuations.

“It is fair at this point to start doing some bargain-hunting,” Lori Calvasina, head of US equity strategy at RBC Capital Markets, told Bloomberg Television. “If you can get people more comfortable in the fundamental narrative going forward, I think that stocks are cheap enough to buy. Are valuations a reason to buy on their own? No, not yet.”

After a major outperformance versus growth shares this year, value stocks are starting to lose their appeal as bond yields peak and the economic recovery grinds to a halt, strategists at Credit Suisse Group AG and Bank of America warned. Value companies have been largely shielded from this year’s market selloff as investors turned to cheaper equities in search of shelter amid fears of rising rates.

US consumer sentiment deteriorated further in late May to a fresh decade low as escalating concerns over inflation dimmed the outlook for the economy. A separate report showed inflation-adjusted consumer spending rose in April by the most in three months, indicating households were holding up in the face of persistent price pressures by dipping into savings.

Some of the main moves in markets:

Stocks

The S&P 500 rose 1.7% as of 2:03 p.m. New York time
The Nasdaq 100 rose 2.5%
The Dow Jones Industrial Average rose 1%
The MSCI World index rose 1.7%

Currencies

The Bloomberg Dollar Spot Index fell 0.2%
The euro was little changed at $1.0719
The British pound rose 0.2% to $1.2619
The Japanese yen was little changed at 127.08 per dollar

Bonds

The yield on 10-year Treasuries declined one basis point to 2.74%
Germany’s 10-year yield declined four basis points to 0.96%
Britain’s 10-year yield declined five basis points to 1.92%

Commodities

West Texas Intermediate crude rose 0.7% to $114.89 a barrel
Gold futures rose 0.2% to $1,857.20 an ounce