Dow jumps more than 300 points, posts best day in over two weeks as Amazon and GM rise

Tech stocks can go lower as long as the rest of the economy does well, says Smead Capital Management CEO
Tech stocks can go lower as long as the rest of the economy does well, says Smead Capital Management CEO

U.S. stocks jumped on Monday as shares of some beaten-down tech companies rebounded after posting steep losses last week while General Motors shares climbed.

The Dow Jones Industrial Average rose 354.29 points to 24,640.24, posting its biggest gain since Nov. 7, while the gained 1.55 percent to end the day at 2,673.45. The Nasdaq Composite outperformed, rising more than 2 percent to close at 7,081.85.

Shares of Facebook, Amazon, Apple, Netflix and Google-parent Alphabet all rose at least 1 percent. These stocks dropped more than 3.6 percent last week, falling further into bear-market territory. The Invesco QQQ Trust, which tracks the Nasdaq 100 index, fell nearly 5 percent and saw more than $1 billion in outflows last week.

"Last week there was a lot of indiscriminate selling," said Ilya Feygin, senior strategist at WallachBeth Capital. "It's almost too late to sell some of these tech names. They've gotten down to a point where companies like Facebook are trading around 18 times earnings, which is not too far from the market multiple."

"Some of these names needed to bounce a bit," Feygin said. 

Monday's moves come after stocks suffered their worst Thanksgiving week since 2011 last week as a sell-off in once-loved technology stocks and oil prices put traders into risk-off mode. On Friday alone, U.S. oil prices plunged about 8 percent.

Traders work on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters

"This is part of a normal bottoming process," said Bruce McCain, chief investment strategist at Key Private Bank. "It's going to be some time before we bounce off the lows."

"But as long as the economy is good and the earnings continue to grow, we still have a chance of making new highs" sometime between the first and second quarter of 2019, McCain said. "This is going to be a worrying time. There's a lot to worry about. But as long as the economy remains strong, we should be OK."

Facebook dropped last week amid further backlash for how the company handled the use its platform by Russian operatives to try to influence the U.S. presidential election. Apple plunged last week as investors worried the company's iPhone sales would slow down.

Oil prices jumped on Monday, with U.S. West Texas Intermediate crude settling 2.4 percent higher at $51.63. Investors had been rattled by fears of oversupply and waning demand in the market.

General Motors rose 4 percent after it revealed plans to cut production at several plants and reduce its salaried workforce by 15 percent, a more drastic cost-cutting plan than investors had expected.

Retailers rose broadly as Black Friday online sales totaled a record $6.22 billion, according to Adobe Analytics. The sales record also marks a 23.6 percent jump in Black Friday online sales from last year. The SPDR S&P Retail ETF (XRT) rose 2 percent, led by gains in GameStop, Amazon and L Brands.

Investors also looked ahead to a speech from Federal Reserve Chairman Jerome Powell later this week. Powell is scheduled to speak at the New York Economic Club on Wednesday. During this recent sell-off, investors have been worried about the future of monetary policy. The Fed is expected to hike rates in December after tightening policy three times earlier this year. For next year, the Fed expects to hike rates three times.

"The market fears that the economy is breaking down and the Fed doesn't care," said WallachBeth's Feygin. "I think he may lay out a more dovish tone. That would help the market."

Politics will be another area of focus for investors this week, with the G-20 summit in Argentina and Brexit dominating headlines. The meeting of the world's most powerful leaders will bring together President Donald Trump and Chinese President Xi Jinping, at a time of intense trade tensions between the two countries. Meanwhile, the U.K. has gained the backing of the European Union on its deal to withdraw from the soon-to-be 27-member bloc.

—CNBC's Ryan Browne contributed to this report.