There was incrementally good news from China on Tuesday, with the world’s second-largest economy halving the quarantine time for foreign travelers into the country. Walt Disney ’s (ticker: DIS) Shanghai Disneyland is also set to reopen this week with limited capacity after a several-month closure.

Tuesday’s consumer confidence index for June from the Conference Board was disappointing. The measure slid 4.5 points from May, to 98.7, falling short of the 101.0 consensus estimate. Tuesday’s reading was the lowest since February of 2021.

“Clearly, the Federal Reserve’s more aggressive path towards curtailing inflationary pressures is affecting how consumers view the short-term economic landscape, which continues to move sharply lower,” said Quincy Krosby, Chief Equity Strategist for LPL Financial, on Tuesday.

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

Investors appear to have been focusing on what could go right over the remainder of the year. Yardeni Research’s Ed Yardeni listed a few positives in a morning note: a strong job market, companies buying back their own stock, signs that pessimism had gone too far, and strong bank balance sheets. The latter was in the news again Tuesday, as many U.S. financial institutions decided to raise their dividends after passing the Fed’s stress tests.

That was boosting the shares of Goldman Sachs (GS), up 0.4%; Bank of America (BAC), up 0.6%; Wells Fargo (WFC), up 0.7%; and Morgan Stanley (MS), up 1.8%.

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

That shift has pushed bond yields higher and squeezed stock multiples. Earnings estimates have held up for most individual stocks and sectors, but the concern is that tighter monetary policy could spur an economic downturn, forcing earnings forecasts to fall and pushing stocks even lower.

“Profit margins for the median S&P 500 company will likely decline next year whether or not the economy falls into recession,” wrote Goldman Sachs strategist Ben Snider. “…While investors are focused on the possibility of recession, the equity market does not appear to be fully reflecting the downside risks to earnings."

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

There will also be more economic data to help determine the future course of rate hikes. U.S. personal-consumption expenditures data Thursday will be closely watched, considering PCE is the Fed’s preferred inflation indicator, while jobless claims on Thursday and the ISM Manufacturing Survey Friday will provide a more up-to-date read on the health of the economy. Next week will bring the June employment report.

Chinese moves to relax Covid-19 restrictions in recent days have also helped boost optimism around the stock market, while also providing a boost to travel stocks in that country. Trip.com Group (TCOM), for one, has jumped 13.2%, while Tuniu (TOUR) has soared 46.5%.

Contrary to the Fed, China’s central bank is loosening policy this year.

“Not only has the PBOC continued to ease, China is starting to wake up to their absurd quarantine rules and started to ease them,” wrote NatAlliance Securities’ Andrew Brenner. “That has given equities a bid."

The Shanghai Composite index rose 0.9% Tuesday.

In another sign of economic optimism, oil prices moved higher Tuesday. Futures for the U.S. benchmark West Texas Intermediate crude rose 1.8% to more than $111.50 a barrel.

“Oil has risen as the G-7 proposed new sanctions on Russian fossil fuels and the U.S. Strategic Petroleum Reserve fell to its lowest since 1986,” said Neil Wilson, an analyst at broker Markets.com.

Overseas, the pan-European Stoxx 600 closed up 0.3% and Tokyo’s Nikkei 225 gained 0.7%.

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

“It is the month and quarter-end this week, and that will prompt no small amount of portfolio rebalancing by institutional investors globally,” said Jeffrey Halley, an analyst at broker Oanda. “We should expect the back-and-forth chop-fest to continue this week in the equity space.”

Here are some stocks on the move Tuesday:

Snowflake SNOW –2.96%  (SNOW) gave up an earlier gain to fall 2.8% after shares in the cloud-based data warehousing company were upgraded to Buy from Hold at Jefferies.

Boston Beer (SAM) declined 4.1% after getting cut to Sell from Neutral at Goldman Sachs. Molson Coors Beverage  (TAP) rose 0.9% after getting upgraded to Neutral from Sell.

eBay EBAY –3.73%  (EBAY) fell 3.0% after getting cut to Neutral from Buy at UBS.

Novo Nordisk (NVO) fell 3.9% after getting cut to Sell from Neutral at UBS.

Qualcomm (QCOM) advanced 5.3% after getting added to BofA’s U.S. 1 List.

Riot Blockchain (RIOT) lost 1.4% after getting upgraded to Buy from Neutral at Compass Point.

After a 14% rally on Monday, Robinhood Markets HOOD –2.69%  (HOOD) fell 1%. Shares in the online broker declined after Sam Bankman-Fried said his cryptocurrency exchange FTX wasn’t in talks to buy the group, contrary to a news report Monday.

© 2022 LeackStat.com