There was more and more good news from China on Tuesday, with the world’s second-largest economy halving the quarantine time for foreign travelers in the country.

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(ticker: DIS) Shanghai Disneyland is also set to reopen this week with limited capacity after being closed for several months.

After a terrible start to 2022, investor sentiment towards some of the most battered stocks and sectors has shifted over the past 10 days. The S&P 500 notched its best day since 2020 on Friday, then posted only negligible losses on Monday.

Investors seem to be focused on what might happen for the rest of the year. Ed Yardeni of Yardeni Research listed some bright spots in a morning note: a strong labor market, companies buying back their own shares, signs that pessimism has gone too far, and strong bank balance sheets. The latter was in the news again on Tuesday, as many US financial institutions decided to increase their dividends after passing the Fed’s stress tests.

This boosted shares of Goldman Sachs (GS), Bank of America (BAC) and Wells Fargo (WFC), which all gained at least 2.5% in Tuesday trading, while Morgan Stanley (MS) climbed by 4.3%.

On the other hand, the familiar pressures remain, with investors particularly focused on tighter monetary policy and the possibility of a recession. The Federal Reserve is taking aggressive action to raise interest rates, having already executed the biggest rate hike in nearly 30 years. The central bank is expected to go much further by the end of this year, aiming to rein in the highest inflation in four decades.

This change pushed bond yields higher and reduced market multiples. Earnings estimates have held up for most stocks and sectors, but tighter monetary policy could trigger an economic slowdown, forcing earnings forecasts to fall and pushing equities even lower.

Next up for central banks this week is an event on Wednesday, when Fed Chairman Jerome Powell and the heads of the European Union and UK central banks will discuss monetary policy.

There will also be plenty of economic data to help determine the future course of rate hikes. Personal consumption expenditure data in the United States on Thursday will be closely watched, given that the PCE is the Fed’s preferred inflation indicator, while unemployment claims on Thursday and the ISM Manufacturing survey Friday’s survey will provide a more up-to-date reading of the economy’s health. Next week will bring the June jobs report.

Chinese moves to ease Covid-19 restrictions in recent days have also helped bolster optimism around the stock market, while boosting travel stocks there.

Trip.com Group

(TCOM), for its part, jumped 15%, while

Tuniu

(TOUR) climbed 45%.

Unlike the Fed, China’s central bank is easing policy this year.

“Not only has the PBOC continued to ease, but China is starting to wake up to its absurd quarantine rules and has started to relax them,” wrote Andrew Brenner of NatAlliance Securities. “It gave the stock a bid.”

The

Shanghai Composite
the index rose 0.9% on Tuesday.

In another sign of economic optimism, oil prices rose on Tuesday. U.S. benchmark West Texas Intermediate crude futures rose 1.6% to more than $111 a barrel.

“Oil rose as the G-7 proposed new sanctions on Russian fossil fuels and the U.S. strategic petroleum reserve fell to its lowest level since 1986,” Markets.com analyst Neil Wilson said.

Overseas, the pan-European Stoxx 600 gained 0.9% and Tokyo’s Nikkei 225 gained 0.7%.

The rest of this week’s action could be driven as much by quarter-end trading as anything fundamental.

“It’s the end of the month and the quarter this week, and that will lead to significant portfolio rebalancing by institutional investors globally,” said Jeffrey Halley, analyst at brokerage Oanda. “We should expect the back-and-forth fest to continue this week in the equity space.”

Here are some stocks in motion on Tuesday:

Snowflake

(SNOW) jumped 3.5% after shares of the cloud-based data warehousing company upgraded to Buy from Hold at Jefferies.

boston beer

(SAM) fell 3.1% after being reduced to Sell from Neutral to

Goldman Sachs
.

Molson Coors Beverages

(TAP) rose 2.9% after being upgraded to Neutral from the sale.

eBay

(EBAY) rose 0.2% despite being cut to Neutral from Buy at UBS.

Novo Nordisk

(NVO) fell 2.7% after being cut from Neutral at UBS.

Qualcomm

(QCOM) advanced 3% after being added to BofA’s US 1 list.

Riot Blockchain

(RIOT) gained 2.5% after being upgraded to Buy from Neutral at Compass Point.

After a 14% rally on Monday,

Robinhood Markets

(HOOD) fell about 2%. Shares of the online broker fell after Sam Bankman-Fried said his cryptocurrency exchange FTX was not in talks to buy the group, contrary to a Monday report.

Write to Nicholas Jasinski at [email protected] and Jack Denton at [email protected]