Market Recap: Monday, June 21

Stocks jumped on Monday, with the three major indexes recovering some of last week's steep losses as an initial jolt following the Federal Reserve's updated outlook for rates subsided. The Dow added nearly 600 points, or 1.8%, and had its best day since March. Last week, the index logged a weekly loss of more than 3% in its worst showing since October. The S&P 500 and Nasdaq were also each higher on the day. Melissa Brown, Managing Director, Applied Research at Qontigo and Ann Berry, Wheelhouse Chief Investment Officer joined Yahoo Finance Live to discuss.

Video transcript

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- Welcome back to Yahoo Finance Live. I want to bring in our panelists as we head into the close here. We are joined by Melissa Brown, managing director of Applied Research at Qontigo, and Ann Berry, Wheelhouse chief investment officer. Welcome to you both. Melissa, I want to start with you as we head into the close here. What do you make of the kind of action we've seen in the market today versus [INAUDIBLE] this last week?

MELISSA BROWN: [INAUDIBLE] because I don't see [INAUDIBLE] between last Thursday and today. So I am finding it a bit surprising, although we were going in with reasonably good market sentiment, even, you know, after the close on Friday. So maybe any little bit of good news was rewarded today.

- And Ann, how about you?

ANN BERRY: One of the things that we've been watching very closely is which way inflationary pressure would tip some of the growth stocks. And so what we've seen today, which is the upward movement, again, on the NASDAQ, the upward movement, again, of some of the key technology stocks, some of the key social media stocks, very much in keeping with what we would have expected, which is, as folks look about where to put their capital in a rising inflation environment, this return to growth feels natural. And we're really looking now, as people come out with announcements on what the second half of the year looks like, we're looking at what new business models are likely to persist going into this post-COVID environment.

- Well, we're just about 30 seconds to the close here, so let's take a look at where we are heading up. [INAUDIBLE] the Dow up 596-- 592 points, the S&P 500 at 58, the NASDAQ, 113. Just five seconds away, waiting for those final closing numbers here. There we have it, the closing bell here on this Monday.

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- All right, we have a closing bell, and recovery looks good after what we saw last week. The Dow had been off at the end of last week about 3.5%. We've recovered a bit today. The Dow is going to settle up about almost 2%, 1 and 3/4 percent, up over 580 points. The S&P 500 is going to be up about 1 and 1/2 percent. It was off last week roughly 1.6%. Again, it's going to settle around, what, 58 points higher today.

NASDAQ was essentially flat for the week. NASDAQ is going to be up 111 points. Just some of the sectors, all the sectors today in the green. Big gainer, materials up 2%, energy up 4%. We had the call that we might see $100 a barrel oil again. Not exactly what those of us who like to drive V8 engines want to hear, but let's get back to the panel to talk about where these markets may be going. Ann, it's really good to see you again. And I wanted to get your take. For those of us who are just average investors, are we [INAUDIBLE] with the inflation picture? You just heard me about oil, with gas prices probably going up, is it really a problem as we go forward to our future [INAUDIBLE]?

ANN BERRY: I do think I'm with the Fed on this one, that a lot of the inflationary pressure I think we're seeing at the moment is temporary. It's transitory. It's a response to blockages that we've seen in the supply chain because of international movement of goods. It's been owing to labor shortages, first owing to COVID fears, now the debate around the stimulus. So I do think, in terms of the longer-term outlook for inflation, I don't worry about it so much, Adam, because I do think the Fed has said they will move quickly to tamper inflationary pressure. And so when I think about the retail investor's income, this isn't something I'm as focused on, perhaps, as last week's market reaction would have projected.

- And Melissa, I want to go back and talk about volatility [INAUDIBLE] what you're going to be focused on as it relates to volatility, especially when we start get the second quarter results in the coming week here.

MELISSA BROWN: Yeah, we have seen volatility just fall like a rock. And as of even after Friday's move, it was about a third of what it had been at the peak during the COVID crisis. So I think that's one of the reasons we're continuing to see positive market sentiment, because it seems like the risk of getting in is low, relatively low. And so we might see a little pop up in volatility after now today's move also. But that's been really the biggest bright spot that we've seen in the market.

ADAM SHAPIRO: Ann, you're the second person who's joined us today who said, look, pay attention to Amazon, although it's been kind of sideways for the past couple of weeks. Why are you, I'm going to say it this way. Why are you high on Amazon with all of the hurdles they face if the government really does try to break them up?

ANN BERRY: I think Amazon's an absolutely unstoppable juggernaut. So Adam, I'll take your statement, why am I high on it and say, I'm very bullish on this. When you look at the history of Amazon, it has been completely unapologetic about trying to expand its white space at breakneck speed. If it looks like it's going to fail, it pulls the plug. If it looks like it's going to succeed, it doubles down.

The fact that the pharmacy is now an area Amazon's been pushing in aggressively is a massive white space for them. Opening up grocery store retail, massive white space for them. Now this acquisition of MGM. I think this convergence of content and commerce, we're just at the early innings. I think Amazon is doubling down on getting real talent and content library in house. I think they have got a long way still to go even with the regulatory pressure.

JULIA LA ROCHE: And Melissa, one of the things that was interesting in your note, you're thinking about sentiment [INAUDIBLE]. Tell us a bit more about what you're seeing and what is kind of showing you right now and what can you infer from that data?

MELISSA BROWN: Well, I mean, we have been seeing for example, investors seeking risk. They're buying higher volatility stocks. They're buying other stocks, higher data stocks that indicate that investors are willing to take on the risk that those stocks entail. And as I mentioned, we're seeing volatility also come down, which is something that we view as being a driver of market sentiment going forward. So all of those things kind of converge to say, OK, sentiment's looking pretty good now.

But we're also looking at some other parts of the market that typically do better when sentiment is poor, or don't do as well when sentiment is strong. So looking at some kind of measures of value or dividend yield. And so there's a little bit of divergence. There's also a divergence between the US and much of the rest of the world, where the investors in the US market seem to be much more positive than we're seeing in say Europe.

ADAM SHAPIRO: And Ann, as we wrap this up, again, I approach this from the average kind of retail investor, what are we not saying? I mean, we talked about Amazon, we talk about the juggernauts in tech, but what are the areas, the sectors that perhaps we're overlooking that we should pay attention to, especially on the eve of Q2 earnings reports?

ANN BERRY: Well, I do think there are actually some areas of traditional retail that people may look at and say, they're sort of clunky and there may not be much room to go, but they're doing some really interesting things. Albertson's, for example, big traditional grocery store, today just announced a very interesting partnership with DoorDash to get very rapid grocery deliveries out there.

So I think going back, looking at some of these traditional retailers, like the Albertson's, like the Walmarts, and seeing in these earnings results discussion around new ways in which they're trying to do business and to get to consumers directly, that's what I'd be looking out for right now.

JULIA LA ROCHE: Ann Berry, Wheelhouse Chief Investment Officer and Melissa Brown, Managing Director of Applied Research [AUDIO OUT] thank you both for this excellent panel this afternoon. Thanks again. And I want to bring in Yahoo Finance's Jared Blikre for his final thoughts on the market today. Jared.

JARED BLIKRE: Well, let's go back to the YFi Interactive. I was looking at the day's price action. By the way, nice price action today for a Monday. I'm still watching like a hawk the 14,200 level, I haven't gotten there. If we sell off from there, probably going to see lower prices. But maybe the worst is over. You take a look at the NASDAQ, that's close to record highs. S&P 500 a little bit close.

And taking a grain of salt with the weak price action that we saw last week, we are heading into the seasonally worst period of the year, one of the worst periods of the year over the next two weeks. Deteriorating breadth statistics that we're looking at. So there could be some more weakness. Not quite out of the woods just yet, but nice to see the green on the screen here today.