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Dow falls nearly 500 points as bear market bounce loses steam

The major averages were mixed on Tuesday following a losing day as the market attempted to keep its rebound from the bear-market lows going.

The blue-chip Dow Jones Industrial Average gained 99 points, or 0.3%. The S&P 500 inched higher by 0.08%, and the Nasdaq Composite was the laggard, down 0.5%.

Major averages cut gains after disappointing economic data. The consumer confidence index fell to a reading of 98.7, down from 103.2 in May and missing a Dow Jones estimate of 100, according to The Conference Board. The weak data came as fears of a recession have increased lately as the Federal Reserve tries to combat surging inflation with aggressive rate hikes.

The Conference Board also said the 12-month inflation expectations index for its consumer confidence survey were at 8% for June, the highest level in data going back to August 1987.

Stock moves followed modest losses on Wall Street as a comeback rally stalled in the previous session. Investors are still searching for a market bottom and hoping last week’s rally sticks, although there doesn’t appear to be a clear catalyst for a meaningful rebound.

“One of the trickier calls in this business is evaluating the difference between a bounce in a bear market vs. the start of a more durable advance,” wrote Chris Verrone, technical analyst with Strategas. “The current bounce, +8% over the last 4 trading days, has been impressive on the surface as most moves of this context tend to be, but again has yet to signal any resounding internal or leadership improvement.”

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On Tuesday, China relaxed its Covid restrictions for inbound travelers, cutting their quarantine time upon arrival by half to seven days. That gave travel and casino stocks a lift. Wynn Resorts and Las Vegas Sands rose more than 7% each. United jumped 6%, while American and Delta Air Lines added more than 5% each.

Disney shares also rose more than 3% after the company announced its Shanghai Disneyland will reopen this week.

Several major banks raised their dividends in response to successfully clearing this year’s Federal Reserve stress tests, including Bank of America, Morgan Stanley and Goldman Sachs. JPMorgan and Citigroup, however, said increasingly stringent capital requirements forced them to keep their dividends unchanged.

Morgan Stanley shares gained nearly 4%.

On Monday, the Dow fell about 60 points, while the S&P 500, dipped 0.3% and the Nasdaq lost 0.7%. The major averages rallied last week, posting their first positive week since May as they rallied off their lows for the year. The S&P 500 is still down 18% on the year but is up more than 7% from its low hit in mid-June.

“Market bulls who have had the rug repeatedly pulled out from under them this year may understandably be suspect of the rally, since many of 2022’s upswings have quickly given way to fresh lows and this time may be no different,” said Chris Larkin, managing director of trading at E-Trade.

Shares of Nike edged lower in trading even after the sportswear company topped Wall Street’s earnings and sales expectations for the fiscal fourth-quarter despite a Covid lockdown in China and a tougher climate for consumers in the U.S.

Despite last week’s bounce, the S&P 500 is down nearly 13% in the second quarter, on track to post its worst quarter since the first quarter of 2020, at the depth of the pandemic.

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