Stocks Rebound as Dow Gains More Than 500 Points

Monday’s moves marked a comeback for stocks after investor anxieties about the Federal Reserve’s path for monetary policy sent the Dow on its biggest decline since the week through Oct. 30.

Initial worries centered around the fact that the Fed officials signaled they may raise interest rates sooner than they had previously anticipated, due to the economy rebounding faster than they thought it would. Investors who are optimistic about stocks say that faster growth and inflation in the coming months is likely to support the market overall—even if long-term rates rise slightly.

“For most investors, looking across the asset landscape, there still remains no alternative to equities,” said Fahad Kamal, chief investment officer at Kleinwort Hambros. “Hiring is happening and normality is returning, and all of that is really positive for cyclicality.”

Others caution that they expect more volatility in the market with investors hyperfixated on changes to the expected trajectory of growth and rates.

“There are no very strong convictions in the market for the time being,” said Nadège Dufossé, head of asset allocation strategy at asset manager Candriam. “The market is really focused on the evolution of rates and central bank comments.”

Stocks rose broadly Monday, with all 11 sectors of the S&P 500 up around midday.

Shares of industrial and financial stocks, which tend to be sensitive to changes in the economic outlook, helped lead Monday’s gains.

Morgan Stanley

rose 1.7%, while

Bank of America

added 1.6%. Among manufacturers,

Boeing

rose 3% and

Caterpillar

added 2.1%.

Meanwhile, online hiring marketplace

ZipRecruiter

jumped 8.1% after analysts at Goldman Sachs and Raymond James gave the stock a “buy” rating.

Cryptocurrency exchange

Coinbase

bucked the trend, falling 3.2% as bitcoin and ether prices extended recent declines.

The digital assets have come under pressure in recent weeks as China has intensified a clampdown on bitcoin mining.

While stocks rallied, government bond prices retreated. The yield on the 10-year U.S. Treasury note, which rises as bond prices fall, climbed to 1.492% from 1.449% Friday.

The 10-year yield had dropped for five consecutive weeks through Friday, its longest stretch of losses since August 2019.

Monday’s bond moves marked a partial reversal of that trend. Federal Reserve Bank of Dallas President

Robert Kaplan

reiterated his support for the Fed pulling back on its bond purchases, citing a strong labor market and signs of inflation picking up.

The central bank should look at taking its foot “off the accelerator sooner rather than later,” he said.

Overseas, the pan-continental Stoxx Europe 600 added 0.7%.

Japan’s Nikkei 225 fell 3.3%, while Australia’s S&P/ASX 200 dropped 1.8% and Hong Kong’s Hang Seng decreased by 1.1%. China’s Shanghai Composite was little changed, ticking up 0.1%.

—Frances Yoon contributed to this article.

Write to Caitlin Ostroff at [email protected] and Akane Otani at [email protected]