By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
UBS strategists: Now isn't the time to bail out of stocks
NEW YORK (MarketWatch) -- U.S. stocks rallied on Monday and
recouped some of the heavy losses from last week's rout, but
investors remained cautious over the timing of the Federal
Reserve's interest-rate hikes.
The S&P 500 (SPX) closed 13.8 points, or 0.7%, higher at
1,938.99, its first gain in three sessions. The Dow Jones
Industrial Average (DJI) added as much as 102 points during the
session, before finishing the day 75.91 points, or 0.5%, higher at
16,569.28 and snapping a four-day losing streak. The Nasdaq
Composite (RIXF) rose 31.25 points, or 0.7% to 4,383.89.
Read the recap of MarketWatch's live blog of today's
stock-market action.
The data calendar was empty for Monday and few companies
reported earnings. Instead, investors focused on last week's
performance, which included the biggest weekly drop in two years
for the S&P 500 (SPX). While Friday's jobs report wasn't as
strong as expected, the data over the week provided more evidence
that the economy continues to gain momentum, which in turn makes it
more likely the Federal Reserve could raise interest rates sooner
than expected.
Bulls vs. bears
Uri Landesman, president of Platinum Partners, a New York-based
hedge fund, hopes the market finally cracks. Landesman has been
calling for a 10%-15% correction for some time, and says one
worrisome sign is that most of the money coming into the stock
market is from individual investors, not the professionals. That,
he notes, s normally associated with the end of a bull market.
"This week's action will be very important. If we snap back and
rally it would mean that the bulls are in control," he said. "If
not, then it would mean that buyers are waiting for markets to go a
lot lower before stepping in. In this case, markets will continue
to sell."
Readings on services and factory orders are due Tuesday, while
data on trade and consumer credit follow later in the week. Read:
Paltry credit-card debt growth signals restrained consumers
On the other side of the argument, Mark Haefele, global chief
investment officer at UBS Wealth Management, and Kiran Ganesh, the
firm's cross-asset strategist, say investors should not be
panicking because valuations are not at extremes, nor are investors
"exuberant."
Michael Kors drops
Among individual stocks, Michael Kors Holdings Ltd. (KORS) fell
5.9% as investors were worried about increased markdowns that were
a drag on the retailer's margins in its fiscal first quarter.
Cardinal Health Inc. (CAH) reported profits that topped
estimates, but shares fell 2.9%.
Amgen Inc. (AMGN) rose 2.6% after the biopharmaceutical company
said a Phase 3 clinical trial for a late-stage treatment of
multiple myeloma was successful.
For more on today's notable movers, read our Movers &
Shakers column.
In overseas markets, Asian stocks had a mixed session, with the
Shanghai Composite Index up 1.7% and the Nikkei 225 index off 0.3%.
Gold prices (GCU4) edged down, while oil (CLU4) was flat and the
dollar (DXY) recouped some losses from last week.
Portugal's central bank late Sunday announced a rescue plan of
Banco Espírito Santo, in which the bank would be split into "good"
and "bad" banks with the "good" bank receiving EUR4.9 billion in
state funds. The upheaval surrounding the bank had some investors
worried about renewed turmoil for Europe's banking system. The
weekend news drove a rally in Portugal stocks and also inspired
some gains in Europe .
More must-reads from MarketWatch:
History says don't count on a big correction soon
Three market signs point to 20% tumble for U.S. stocks
Warning: That plunge in stocks is just the beginning
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