Stocks bounced on Monday as investors snapped up beaten-down shares such as banks after the Dow Jones Industrial Average notched eight straight losing weeks.
The blue chip index jumped 618.34 points, or nearly 2%, to 31,880.24. The S&P 500 advanced about 1.9% to 3,973.75, cutting its losses after falling into bear market territory at one point on Friday, down more than 20% from its record. The Nasdaq Composite rose 1.6% to 11,535.28.
It remains to be seen how long the three indexes can hold these levels, analysts said. Investors have been here before, welcoming small relief rallies during this year's turmoil but wondering when the rebound will be strong enough to reverse the months-long downtrend.
"This impulse has failed multiple times over the past several weeks," Ross Mayfield, investment strategy analyst at Baird, told CNBC. "The bar is higher now for sustained positive performance given all of the well-known headwinds" — like slowing growth, elevated valuations, rising rates and recession fears.
"With so many stocks down significantly year to date, it won't be surprising to see a brief reprieve in U.S. markets today," said Wayne Wicker, chief investment officer at MissionSquare Retirement. "However, with the given challenges related to inflation, rising interest rates and geopolitical events as we come into the summer months, investors should expect continued volatility in the near term."
JPMorgan rose 6.2% after the bank said it expects to reach key return targets sooner than planned, thanks to rising rates giving its lending business a boost. Citi also got a 6% boost, as the benchmark 10-year Treasury yield rebounded from last week. Wells Fargo and Bank of America each added more than 5%.
Ross Stores and TJX were also in the top gainers Monday, up roughly 9.6% and 4.2%, respectively, coming off a busy few days of earnings for retailers. Others in the sector, including Costco, Dollar General, Nordstrom and Macy's, are scheduled to report their results this week. That'll be a key focal point for investors, who are eager to see if high-level demand remains robust and whether some of last week's weakness was company-specific, Mayfield said.
Shares of VMWare jumped more than 24.9% after Bloomberg News and Reuters reported that chipmaker Broadcom is in talks to acquire the cloud services company, citing sources. Broadcom shares fell 3.1%.
Electronic Arts shares rose 2.3% following a report that the video game maker is actively seeking a sale or merger.
Sentiment appeared to have gotten a boost after President Joe Biden said he was considering reducing tariffs on some products imported from China. "I am considering it," Biden said. "We did not impose any of those tariffs. They were imposed by the last administration and they're under consideration."
Investors have been looking for signs of a bottom as the market 2022 sell-off in stocks approaches its sixth month. Oppenheimer's chief investment strategist, John Stoltzfus, noted that nasty sell-offs aren't uncommon in times of Federal Reserve tightening, and that the market appears "way over sold" with big declines hitting even stocks with strong cash flow and profitability.
"We remain positive on equities favoring cyclicals over defensives and profitable technology companies whose services and products are deeply embedded in the lives of both business and the consumer," he said in a note Monday. "We look for the economy and the markets... to 'work their way out of the woods' from a period of high anxiety and crisis."
The S&P 500 currently sits 17.5% off its record high, while the Dow is down 13.7%. The Nasdaq is already deep in bear market territory, down 28.8% from its high.
The end of last Friday's session marked the Dow's first eight-week losing streak since 1923. The S&P 500 also capped seven consecutive weeks of losses, its worst since 2001.
The Nasdaq saw its seventh negative week in a row for the first time since March 2001. The tech-heavy index also saw its lowest intraday level since November 2020 on Friday.
"Investors are trying to come to grips with what exactly is happening and always try to guess what the outcome is," said Susan Schmidt of Aviva Investors. Investors and the market hate uncertainty "and this is a period where they don't have any clear indication on what's going to happen with this push-pull between inflation and the economy."
In addition to this week's retail earnings, investors are looking ahead to Zoom Video, which is set to report results Monday after the close. Nvidia results are also on deck this week.