Bulls give an evidence of life

Don't want to miss the best from Business Standard?

Just when it looked like US stocks were doomed to follow the rest of the world into a bear market, buyers emerged in a holiday-shortened week, lifting equities out of their deepest hole since 2014.

Improving economic data and the worst sentiment readings in three years combined to ignite the biggest weekly rally for the year for the Standard & Poor's 500 Index, including the first three-day stretch of 1 per cent gains since 2011. Losses on Thursday and Friday did little to overturn an advance that was led by banks, oil companies and other beaten-down industries.

"It suddenly looks like people are starting to dig around for babies thrown out with the bath water," said John Stoltzfus, the New York-based chief market strategist at Oppenheimer & Co. "In the last eight days, we've had a significant reversal from risk off to risk on. Sentiment has moved away from overwhelmingly negative to sceptical."

The S&P 500 gained 2.8 per cent to end at 1,917.78, as the strongest weekly gain since November helped recoup a portion of the $2 trillion of US equity value that was erased in 2016. The benchmark still sits 10 per cent below its May high. The Nasdaq Composite Index advanced 3.9 per cent, the most since July, while the Dow Jones Industrial Average gained 2.6 per cent.