Dow Jumps 400 Points As Recession Certainty Grows Murkier

The Dow Jones Industrial Average rose 1.3%, or 420 points, looking to build off its 4.9% gain last week, its best weekly performance in four months, while the S&P 500 gained 1.2% and the tech-heavy Nasdaq rose 0.9%.

The gain is largely due to increasing expectations that the Federal Reserve will eventually back off of its aggressive interest rate increase plans as data begins to show some cooling of inflation and Fed officials begin to express hesitation what rate hikes may mean for the health of the economy generally, with Morgan Stanley analysts noting in a Monday note to clients “falling inflation expectations can lead to lower rates and higher stock prices.”

Monday was far from a good day for all stocks, as driving Nasdaq’s stagnation was Tesla, which fell 1.5% to $211.25, briefly hovering at its 12-month low below $200 in morning trading, after it decreased prices of some of its vehicles in China, while shares of Facebook parent Meta dropped as much as 4% before mounting a furious comeback to a 0.2% daily gain after Bank of America downgraded its rating for the company, expressing skepticism in Meta’s metaverse and Instagram Reel investments.

The market also reacted strongly to major political news abroad, as several New York-listed Chinese firms mounted big losses after Chinese President Xi Jinping secured a third term in power, with Alibaba shares crashing 12.6% to $63.10.

The bond market, which dropped to its lowest levels in decades over the last six weeks, had a confounding reaction to Rishi Sunak being made U.K. Prime Minister Monday: Yields of 10-year British gilts fell 10 basis points to 3.72%, nearly 90 basis points lower than its 4.6% peak earlier this month, while yields for 10-year U.S. Treasury notes rose as much as eight basis points to 4.28% before settling to 4.25%.