U.S. stocks recovered nearly a third of their losses from the previous week shortly after the open Monday, restoring some confidence in a market that has been plagued by rising interest rates and concerns about a global economic slowdown.
Whether today’s rally is an actual indicator of impeding relief or simply a dead cat bounce remains to be seen, but Wall Street certainly had a few things to be hopeful about after returning from the shortened Thanksgiving week.
Here’s a look at three of the major talking points fueling Monday’s rally.
The Rally in Europe
European stocks mounted a relief rally of their own on Monday, and it is possible that this bullishness made its way across the Atlantic by the time U.S. markets opened. All European markets rose today, with the STOXX Europe 600 index adding as much as 1.3% from Friday’s close and 2.2% from recent 52-week lows.
One might argue that this rebound is too young to indicate a full-blown recovery for European equities, but the continent did make some positive progress on a few of the economic uncertainties that have hurt stocks this year.
Notably, reports indicated that Italy’s new populist government is considering lowering its planned budget deficit to 2% from 2.4% in an attempt to appease EU regulators. This helped lift European banking stocks and the broader financial sector.
Banks in London saw an even stronger rally Monday after EU leaders over the weekend supported Theresa May’s proposed Brexit plan. The embattled prime minister will still face an uphill battle to win parliamentary approval of the deal, but investors seemed to acknowledge this endorsement as a step in the right direction.
Respite for Oil Markets
An uptick in oil prices also lifted the mood on Wall Street this morning. Crude prices pared some losses after tumbling nearly 7% to touch a four-year low on Friday. Cheaper oil is not inherently a bad thing for non-related equities, but sudden volatility in the market raised concerns about the demand side of the business, which can signal trouble ahead for the broader global economy.
Oil’s recent decline comes just weeks after the black gold reached a four-year high ahead of U.S. sanctions on Iran, so it is still unclear exactly what’s coming next for the commodity. Traders will now look to see whether OPEC can muster further relief by controlling supply.
Black Friday and Cyber Monday
Another catalyst for Monday’s rebound was the prospect of record-breaking Cyber Monday sales on the back of a historic Black Friday.
Black Friday online sales reached $6.22 billion this year, up nearly 24% on a year-over-year basis and reaching a new all-time high, according to CNBC and Adobe Analytics. That e-commerce momentum is expected to continue on Cyber Monday, with Adobe Analytics calling for a record $7.8 billion in sales during the online shopping holiday.
This record activity has supported gains in the retail sector on Monday. Amazon (AMZN - Free Report) shares were up nearly 4% through morning hours, while Target (TGT - Free Report) , GameStop (GME - Free Report) , and Best Buy (BBY - Free Report) also outpaced wider indexes.
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