Stock markets shot upward on Monday, the latest in a series of wild swings, after several big financial institutions reported earnings that beat expectations.
Large day-to-day fluctuations have become more common in the stock market this month. The S&P 500 closed with a gain of 2.65 percent, reversing a fall of more than 2 percent on Friday, which itself came after a rise of more than 2 percent on Thursday. All 11 sectors of the S&P 500, which include groupings like technology, energy and real estate, were also up. The benchmark index has recorded six daily moves bigger than 2 percent this month, compared with only two in September.
The S&P remains down more than 22 percent since the beginning of the year.
The big shift in the markets on Monday came after Bank of America, the nation’s second-largest bank, reported quarterly earnings that beat expectations. Also lifting sentiment was news from Britain that Prime Minister Liz Truss’s tax plan, which had rattled markets, would be reversed.
Bank of America pointed to continued strength in consumer spending, echoing the earnings of other big banks at the end of last week. Its shares rose 6 percent. Charles Schwab and the Bank of New York Mellon also reported better-than-expected earnings.
Investors are keeping a close eye on companies reporting earnings this quarter to gauge whether big corporations are beginning to feel the effects of an economic downturn. This week, businesses including American Airlines, Goldman Sachs and Procter & Gamble are set to open their books, providing updates and forecasts for investors anxious about the path of the economy.
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The big gyrations in stocks lately haven’t always been about changes in fundamentals, like a strong earnings report, said Kristy Akullian, a senior iShares strategist at BlackRock. There’s a “technical element” too that’s driving the bigger-than-usual moves, she said.
“We’re actually seeing that whenever the market rallies a little bit, it tends to rally a lot.”
Yields on U.S. government bonds, a benchmark for borrowing costs, were largely unchanged. The yield on the two-year note inched lower, to 4.45 percent. The yield on the 10-year note was unchanged at 4.02 percent. Yields move inversely to prices.
In other markets, the price of West Texas Intermediate crude oil, the U.S. benchmark, fell 0.3 percent, to $85 a barrel. The price of Brent crude, the global benchmark, also fell 0.1 percent, to almost $92 a barrel.
London’s FTSE 100 closed with gains of 0.9 percent, the British pound strengthened and Britain’s government bond yields plunged after Jeremy Hunt, the newly installed chancellor of the Exchequer, announced on Monday more reversals of Ms. Truss’s plan for tax cuts funded by additional borrowing.
“At a time when markets are rightly demanding commitments to sustainable public finances, it is not right to borrow to fund this tax cut,” Mr. Hunt said.
Last week, data showed that inflation in the United States did not cool down as much as economists had expected, a sign that the Federal Reserve would likely announce another substantial interest rate increase at its next meeting in November. That prospect, paired with a survey that showed an increase in consumers’ expectations for future inflation, had cast a shadow over markets.
“We think that this volatility is going to persist,” Ms. Akullian said. “Most likely until the end of the year and probably even past that until we have a little bit more of a concrete sense for what the Fed is going to be able to do.”
