Dow notches best day since March as Wall Street rebounds

By Anneken Tappe, CNN Business

US stocks soared Monday, making up lost ground after a multi-day losing streak last week.

The Dow closed 1.8%, or nearly 590 points, higher. The S&P 500 — the broadest measure of Wall Street — climbed 1.4%.

The Dow snapped a five-day losing streak, its longest since January, while the S&P recorded its first gain in four days — its longest losing streak since February. It was the S&P’s best day in about five weeks.

Monday’s rebound was the Dow’s best performance since early March and is bringing the index back from “extremely oversold levels,” said analysts at Bespoke Investment Group.

The tech-focused Nasdaq Composite finished up 0.8%.

The stock market losses came on the heels of last week’s Federal Reserve policy update, which paved the way for a sooner-than-predicted interest rate hike.

The Fed’s projections showed interest rates would increase in 2023, though some central bank officials even think a rate hike would be feasible next year. On Friday, St. Louis Fed President James Bullard said during an interview with CNBC that he believes rates should be raised as soon as the end of 2022.

Higher interest rates are perceived as negative for stocks even if they come on the coattails of a stronger economy because they would mean higher borrowing costs for companies.

For now, however, rates are still low and that won’t change from one day to the next.

“It’s clear that the economy is improving at a rapid rate, and the medium-term outlook is very good. But the data and conditions have not progressed enough for the FOMC to shift its monetary policy stance of strong support for the economic recovery,” said New York Fed President John Williams during a speech at the Midsize Bank Coalition of America.

Williams repeated the Fed’s chorus that the nation needed to get to maximum employment and see inflation moderately exceeding 2% for some time for the central bank to change its tune.

Pain in the crypto-verse

But it wasn’t all rallies and green arrows Monday. Bitcoin was down 8% around the time of the New York stock market close, having dropped to its lowest level in about two weeks. One bitcoin was trading around $32,600, according to Coindesk data.

The drop came on the back of China cracking down further on cryptocurrencies, both in terms of mining bitcoin and trading digital assets.

“Bitcoin needs to expedite transitioning mining out of China,” said Edward Moya, senior market analyst at Oanda.