Markets

Dow jumps 600 points, S&P 500 adds 2.5% in comeback from worst weekly loss in 2 years

Wall Street still waiting for economic data to catch up to markets, says SoFi's Liz Young
VIDEO2:4702:47
Wall Street still waiting for economic data to catch up to markets, says SoFi's Liz Young

Stocks rose Tuesday following a brutal week as investors assessed a more aggressive Federal Reserve and rising chances of a recession.

The Dow Jones Industrial Average jumped 641.47 points, or 2.15%, to 30,530.25 in its best day for the month. The S&P 500 also climbed 2.45% to 3,764.79, making it the index's best day in June. The Nasdaq Composite popped 2.51% to 11,069.30. U.S. stock markets were closed Monday for Juneteenth.

Those moves followed last week's declines in which the S&P 500 posted its worst week since 2020. Many investors fear that a rebound amid growing fears of a recession may be short-lived, though others expect that equities may be oversold after more accurately pricing in inflationary pressures.

The comeback was broad-based with 441 stocks of the S&P 500 gaining.

"The outstanding question is whether this is simply a bounce or the bottom," said Sam Stovall, chief investment strategist at CFRA Research. "I think that this could certainly be a bounce but not the bottom because the one missing ingredient is a fear-based capitulation sell-off."

Stovall thinks the S&P 500 could fall to around 3,200 before recovering, or a more than 30% decline from its record high.

Big bounces of this sort have been commonplace during this bear market. The S&P 500 has popped more than 2% on 10 other occasions since this bear began at the start of January, only to give up that gain and trade lower. Some investors have doubts that this bounce will be the one that marks the turn, especially with no apparent news or catalyst driving it.

S&P 500's 2% gains during current bear market

Date % Change
4-May2.99%
9-Mar2.57%
28-Apr2.47%
27-May2.47%
Tuesday2.45%
28-Jan2.43%
13-May2.39%
16-Mar2.24%