S&P 500 Bounces Above 4580

The S&P 500 has seen a decent bounce on Monday and currently trades higher by over 1.0% on the session around the 4580 level, as investors continue to buy the dip in light of the index testing its 21-day moving average at 4525 last week.

Sensitive cyclical stocks outperformed on Monday, with the S&P 500 value index rallying 1.8%. That compares to a comparatively downbeat performance for the US “growth” sector, which rose just 0.1%.

Value stocks were bid higher as traders bet that the US economy would perform better than feared in 2022 as the tone of news regarding Omicron improved over the weekend.

There was further commentary from South African health officials pointing out that Omicron infection appears to be associated with comparatively mild symptoms versus past variants.

Value stocks also performed better as a rise in US bond yields undermined the appeal of duration-sensitive growth stocks.

Growth stock valuation is disproportionately based on expectations for future earnings growth rather than present earnings, leaving valuations more vulnerable to a rise in opportunity cost in treasury yields.