Stocks are surging today.
On Tuesday afternoon, the S&P 500 rose to a seven-week high, while the Dow gained as many as 330 points, and the Nasdaq clocked a triple-digit gain, up as many as 110 points, or 2%.
In an afternoon note to clients, JonesTrading’s Dave Lutz sent out this brief list of why stocks are rallying today:
- After speaking to Chinese officials, Treasury secretary Jack Lew said they had assured him there’ll be no need or plans to devalue the yuan further.
- Weak US and China manufacturing PMI are sparking rallies as traders bet central banks may keep monetary policy dovish.
- European Central Bank president Mario Draghi sounded dovish in a letter to a member of parliament dated today saying that the bank will review its stimulus program next week due to weaker-than-expected inflation and higher economic uncertainty.
- US economic data, which beat forecasts, is sparking a “risk-on” move to stocks and away from treasuries.
- Crude oil is rallying after President Vladimir Putin said Russian companies agreed not to increase output this year.
- Mega caps are surging, with the FANG basket (Facebook, Amazon, Netflix and Google i.e. Alphabet) up more than 3%, and Apple shares up above $100.
- The first day of the month brings some “allocation shenanigans”.
- There’s a heavy volatility unwind, with the CBOE volatility index (VIX) down 11% for stocks, and oil’s VIX down 5%.