By Yasin Ebrahim
Investing.com – The S&P bounced back from a rout last week, with investors pouring into beaten-down stocks as China's efforts to limit the impact on global growth from the coronavirus and strong U.S. stronger manufacturing data supported sentiment.
The S&P 500 rose 0.73%, while the Nasdaq Composite gained 1.34% and the Dow Jones Industrial Average was up 0.51%.
Fears about a significant slowdown in China denting global growth eased somewhat after the People's Bank of China said it would inject stimulus of $21.7 billion to curb the expected impact on the economy.
The action by China's central bank stoked hopes that other central banks could follow suit and adopt ultra-easy monetary policy in the event of a pandemic.
But Allianz (DE:ALVG) Chief Economic Adviser Mohamed El-Erian warned that central banks were nearing a point where they are "ineffective if not counterproductive" in solving current issues.
Beyond virus concerns, consumer discretionary raked up gains on a rally in Nike (NYSE:NKE) and Ulta Beauty (NASDAQ:ULTA) amid favorable upgrades from analysts on Wall Street.
Nike rose about 3% after UBS upgraded its rating on the company to buy from neutral and its price target to $136 from $103. The athletic footwear and apparel maker’s product innovation investments and e-commerce business are expected to boost growth, UBS said.
In addition, J.P Morgan added the stock to its Analyst Focus List.
Goldman Sachs upgraded Ulta to buy from neutral and raised its price target on the stock to $307 from $285, citing a favorable valuation at current levels. There is little chance that of Ulta's operating margins "unraveling" in the event that its sales growth slows further, the investment bank said. Shares were up nearly 3%.
A rebound in manufacturing, meanwhile, also added conviction to the rally on Wall Street.
ISM manufacturing data for January showed an uptick to 50.9, beating expectations of 48.5.
The energy sector kept gains in check, however, as oil prices fell into a bear market, down more than 20% from their recent peak amid ongoing worries about the virus impact on air travel.
In other news, Tesla (NASDAQ:TSLA) continued to advance, surging 20% after Argus boosted its price target on the stock to $808 from $556, on expectations for continued growth following the electric vehicle's better-than-expected quarterly results reported last week.