The main, if only, question going into this week’s trading was what kind of snapback the market would exhibit in the wake of Friday’s plunge that erased half of January’s gain.
The answer from Monday seems to be an equivocal “it remains to be seen.”
Stocks did rally, as one would’ve exhibited after such a huge selloff, but they have the rest of the week to show that the lofty round numbers in sight last week — 12,000 for the Dow and 1300 for the S&P 500 — can be brought back into play.
The Dow Jones gained 68 points, or 0.6%, to 11,892, the Nasdaq added 13 points to regain 2700 and the S&P 500 rose 10 points, or 0.8%, to 1286..
Much like Friday’s broad-based free fall, Monday’s action, thanks to another one of those last-hour rallies, was a day where most everything worked — as long as you were long the market.
Largecaps, smallcaps, midcaps — take your pick. Advancing volume on both the New York Stock Exchange and Nasdaq was at least twice that of declining volume.
If there was a market star on Monday, it was undoubtedly commodities, which showed a broad-based push not seen in roughly two months, and taking the CRB Commodity Index close to a 28-month high.
Oil jumped more than 3% to move above $92 a barrel, and had earlier moved pennies away from $93 a barrel, hitting a two-year high. Natural gas was up 2%.
Of course, with oil rebounding as it has, the continual question as to whether it portends an inflationary runup in global demand or a yoke around a still-fragile economic recovery remains to be seen.
As one would expect, commodity-related stocks were strong on Monday — coal companies got a double boost from both the surge in energy prices, as well as the news that Massey Energy (NYSE:MEE) was to be snapped up by Alpha Energy Resources (NYSE:ANR) for $7.1 billion.
Interestingly, one of the day’s top performers was the Market Vectors Egypt Index (NYSE:EGPT) exchange-traded fund, which caught a bid of nearly 8%, as buyers stepped in after the trading in the ETF resumed after an early morning halt due to the Egyptian Stock Exchange’s two-day closure. Antigovernment protests in that country have entered their second week.
Whether the U.S. stock market has a similarly strong move in it this week will be a key for investors seeking clues on direction in the year’s second month.
