Volatility is the name of the game these days as investors try to size up the economic outlook and what it might mean for their portfolios. It hasn't been easy forecasting where things might go from here, and a raft of mixed outlooks have led to difficult investing conundrums. As traders size up the latest sentiment, a broad-based rally took hold of equities on Monday, with the Dow Jones (DJI) popping 550 points, the benchmark S&P 500 (SP500) jumping 2.7% and the tech-heavy Nasdaq (COMP.IND) surging 3.4% into the close. Futures tied to the benchmarks climbed further overnight, recording gains of 1.5%-2% as of 4:00 a.m. ET.
Healthy consumer: Following in the footsteps of JPMorgan and Wells Fargo, Bank of America reported earnings on Monday that topped expectations despite a slew of worries that continue to spook the economy. Customers are continuing to spend freely, according to BofA, with account balances higher than before COVID-19. Net interest income also jumped 24% to $13.8B, while consumer credit remained strong and late-stage delinquencies were down 40% from pre-pandemic levels.
"Analysts might wonder whether the talk of inflation, recession and other factors could [result] in a slower spending growth," CEO Brian Moynihan said on a conference call. "We just don't see [that] here at Bank of America. The customers' resilience and health remain strong."
Coming up: While banks benefit from rising interest rates, it remains to be seen if additional companies will fare as well in the current environment. Earnings season will move on from financials this week as high-profile names like Netflix, Tesla and others report results. Is the bottom in, or will unchanged fundamentals mean the latest advance could translate into yet another bear market rally?