Investing.com – Wall Street made a strong recovery as investors appeared to take advantage of cheaper stocks following last week’s slump.
The Dow Jones Industrial Average closed higher at 24,600.58. The S&P 500 closed 1.39% higher, while the Nasdaq Composite closed at 6981, up 1.56%.
Financials rose sharply, lifting the broader indexes higher, amid expectations for tighter monetary policy and ongoing recovery in inflation.
Also supporting sentiment on US equities was a fall in volatility as measured by the so-called fear index VIX, which last week rose to its highest level since 2015 amid a surge in US bonds yields to four-year highs.
The rise in US bond yields was said by many to be one of the catalysts for the recent selloff, as higher bond yields are expected to go head-to-head with equities, competing for a larger chunk of investors’ portfolios.
UBS suggested, however, that equities have not yet peaked as bull markets typically end 3 to 12 months before the start of a recession, with the Federal funds rates at or near cycle peaks and the yield curve flat or inverted.
On the political front, investors cheered Monday’s release of the Budget and Infrastructure Plan from the White House. The infrastructure plan is widely expected to provide a fiscal lift to the US economy.
The infrastructure plan aims to spur $1.5 trillion in new investment by upgrading roads, airports and other public works. The plan also called for $50 billion to be invested in broadband, roads, power, and water projects.
The plan, however, is expected to meet resistance from both sides of the Congressional aisle as Republicans are wary of another big spending measure– after a $300 billion budget deal was signed last week – while Democrats claim the plan falls short of expectations concerning Federal funding.
The budget plan, meanwhile, forecasts the deficit for fiscal year 2019 to be $984 billion, an increase from the previously projected $526 billion.
'Bulls and Bears' on Wall Street
The top Dow gainers for the session: Apple (NASDAQ:AAPL) rose 4.1%, DowDuPont Inc (NYSE:DWDP) up 3.6%, and Boeing (NYSE:BA) up 3.4%.
General Electric Company (NYSE:GE) down 0.8%, Home Depot Inc (NYSE:HD) down 0.1%, were among the worst Dow performers of the session