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Dow closes 400 points higher after worst week in 2 years

CNBC logo CNBC 2/12/2018 Fred Imbert and Alexandra Gibbs


Stocks rose Monday as the major indexes rebounded from their worst weekly performances in two years.

The Dow closed up more than 400 points. American Express and Apple were the best-performing stocks in the index, rising 4 percent each.

The S&P 500 gained 1.4 percent, with energy and financials as the best-performing sectors. Real estate was the worst-performing sector as interest rates climbed. The Nasdaq advanced 1.55 percent. Shares of Amazon, Bank of America and Apple, which fell sharply last week, all rose by at least 3 percent.

The Dow and S&P 500 both pulled back 5.2 percent last week, notching their worst weekly declines since January 2016. The Nasdaq composite, meanwhile, dropped 5.1 percent, marking its biggest one-week pullback since February 2016. The indexes also dipped into correction territory.

The 30-stock Dow closed more than 1,000 points lower twice last week and rose more than 300 points in two other trading days. The S&P 500, meanwhile, posted moves greater than 1 percent in four-of-five trading days last week.

"This looks like a corrective phase rather than the start of a bear market," said Katie Stockton, founder of Fairlead Strategies. "The biggest risk to the marker prior to this sell-off was sentiment and we've seen that go from overly bullish to overly bearish."

Stockton noted, however, it could take a few more weeks until this correction is over.

The major indexes closed out last week on a high note, with the Dow rising 330 points on Friday while the S&P 500 and Nasdaq gained more than 1.4 percent.

"The market is trying to bounce here, but we have yields climbing and that could dampen enthusiasm," said Peter Cardillo, chief market economist at First Standard Financial.

Investors have been on edge as of late over concerns surrounding higher interest rates, therefore moves in the bond market will continue to be of key importance going forward. The benchmark 10-year U.S. note yield rose to a four-year high on Monday before trading at 2.851 percent.

The latest move higher follows news that the White House will unveil a long-awaited infrastructure plan that includes $200 billion in federal infrastructure spending over 10 years.

"It is no surprise that Trump's agenda will provide a great deal of fiscal stimulus from tax cuts, and more spending on defense and infrastructure," said Ed Yardeni, president and chief investment strategist at Yardeni Research. "The jury is still out on whether all that fiscal stimulus will revive inflation. "[We] don't think so, but the Bond Vigilantes are saddling up." He also said his firm raised its 2018 forecast on the 10-year yield to a range of 3-to-3.5 percent.

Elsewhere, oil prices posted sharp gains during the first day of the trading week, as markets regained some of their footing across the globe. U.S crude was trading around $60.14 at 10:06 a.m. ET, while Brent futures hovered around $63.64.


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