Stocks rebounded nicely on Monday helped largely by stimulus chatter out of China that sent the Shanghai Composite Index on a tear. Also, traders are somewhat retroactively applying the “dovish” label to Fed chairman Janet Yellen’s comments on Friday.
She said that the pace of rate hikes could be reversed, stopped, or slowed should the economy falter. Given another batch of weak economic data today — this time, the Dallas Fed Manufacturing Index which plunged to the lowest level since June 2011 — the thinking is that the Fed will need to push back its rate liftoff timing. New orders crumbled to
The other big news is the surge in Intel Corporation (NASDAQ:INTC) following reports it could be preparing a large acquisition of Altera Corporation (NASDAQ:ALTR). The latest is that deal talks are advanced but could take up to a week to conclude. That pushed up the April $32 calls recommended to Edge Pro subscribers to a gain of more than 43%.
In the end, the Dow Jones Industrial Average gained 1.5% but couldn’t hold the 18,000 level, the S&P 500 gained 1.2%, the Nasdaq gained 1.2%, and the Russell 2000 gained 1.4%. With Tuesday the last day of the first quarter, the S&P 500 is on track for a 1.3% gain.
Energy stocks led the way at the sector level followed by mining, coal, steel, regional banks, and home builders. United States Steel Corporation (NYSE:X) added 2.7% to push up the April $25 calls I recommended to subscribers on Thursday to a gain of 22%.
Tesla Motors Inc (NASDAQ:TSLA) jumped 3% after CEO Elon Musk published a tweet about a product announcement planned for April 30. It’s a bit early for an April fool’s joke, so it’s probably real.
There was good news on the economic front as well as my theme of 2015 being the year of the middle-class bounce back comes to fruition. Personal income rose 0.4% in February for a 4.5% year-over-year rate following a 0.4% increase in January. Expenditures are lagging this growth, up 3.3% over last year, pushing the savings rate up to 5.8%.
That should help rebuild balance sheets, pay down high-interest credit, and pave the way for a surge in retail spending in the months to come as the depressing effect of the winter weather fades away.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters.
