US stocks jump 2% after recent sell-off; yen drops vs dollar

NEW YORK, USA – Stocks on global indexes rose sharply on Tuesday, June 21, with major US stock indexes each ending up more than 2% following a recent sell-off, while the Japanese yen fell against the US dollar to its lowest level since October 1998.

Wall Street climbed as participants returned from a long weekend, with investors buying up shares of megacap growth and energy companies hit last week by global economic worries.

“After back-to-back weeks of 5% declines, you’ve pushed the ball under the water far enough now that we’re getting a bounce,” said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago.

But, Nolte said: “Interest rates are still going higher. Oil is still going higher.”

Energy shares climbed along with oil prices. Oil gained on high summer fuel demand. The S&P 500 energy index jumped 5.1%.

Last week, the S&P 500 confirmed it is in a bear market as investors sold stocks amid worries over whether the Federal Reserve will be able to tame inflation without triggering a recession.

Investors expect interest rate hikes from other major central banks as well.

The Dow Jones Industrial Average rose 641.47 points, or 2.15%, to 30,530.25, the S&P 500 gained 89.95 points, or 2.45%, to 3,764.79, and the Nasdaq Composite added 270.95 points, or 2.51%, to 11,069.30.

The pan-European STOXX 600 index rose 0.35% and MSCI’s gauge of stocks across the globe gained 1.91%.

US Treasury yields were higher as the risk-off mode that weighed on US markets last week took a breather.

Benchmark 10-year yields climbed to 3.303% from their 3.239% close at the end of last week.

All eyes are now on Fed Chair Jerome Powell’s testimony to the Senate banking committee on Wednesday, June 22, for clues on rates.

Goldman Sachs has said it now thinks there is a 30% chance of the US economy tipping into a recession over the next year, up from its previous forecast of 15%.

In the foreign exchange market, the yen dropped to a new 24-year low.

Japanese Prime Minister Fumio Kishida said the central bank should maintain its current ultra-loose monetary policy. This makes it an outlier among other major central banks.

The dollar index was little changed at 104.41, but it was supported overall by the expectations of rate hikes at upcoming Fed meetings.

Brent crude futures rose 52 cents, or 0.5%, to settle at $114.65 a barrel. The US West Texas Intermediate crude contract for July expired on Tuesday, closing at $110.65, with a gain of $1.09, or 1%. The more active August contract was up $1.53 at $109.52.

Spot gold dropped 0.3% to $1,832.77 an ounce.

Bitcoin last rose 1.56% to $20,876.57. – Rappler.com