Stock Market Today (5/23/22): Stocks Come Out Swinging to Start the Week – Kiplinger's Personal Finance

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One trading session after the S&P 500 narrowly escaped bear-market territory, U.S. equity bulls went on the offensive in a day of robust and widespread gains.
A few single-stock headlines did some of the driving Monday. JPMorgan Chase (JPM, +6.2%), for instance, rocketed higher after CEO Jamie Dimon said "there's a very good chance" that his bank would hit a key performance target (17% return on tangible common equity) in 2022, and possibly exceed it in 2023. The announcement, a reversal of more dire guidance earlier this year, sent the sector, including Citigroup (C, +6.11%), Bank of America (BAC, +5.9%) and Wells Fargo (WFC, +5.2%), higher too.
Also Monday, shares of VMware (VMW, +24.8%) popped amid a Bloomberg report that semiconductor firm Broadcom (AVGO, -3.1%) was in talks to acquire the $40 billion virtualization and cloud computing firm.
While little information about a potential deal was available, Stifel analyst Brad Reback says "We believe it makes sense on many fronts as a Broadcom-controlled VMware will likely be much more profitable, less dependent on top-line growth and have less pressure to accelerate its ongoing shift to a (software-as-a-service) model."
The Dow Jones Industrial Average climbed 2.0% to 31,880, while the Nasdaq Composite was up 1.6% to 11,535. And all 11 of the S&P 500's sectors finished in the green, pushing the index 1.9% higher to 3,973 to give it some distance away from bear-market territory.
Some of the day's upward momentum might have been simply good old-fashioned dip-buying now that equity valuations have cooled off significantly from earlier-year levels. "Remember when stocks looked expensive on valuation?" say BofA Securities researchers. "The forward P/E ratio of the S&P 500 is now 16.5x, down from the high of 21.4x."
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But investors might want to stay cautious, given a number of previous head fakes from the market. Michael Reinking, senior market strategist at the New York Stock Exchange, said it would be important for the S&P 500 to, among other things, close above Friday’s high, which it did.
"One thing that I will highlight that is different about today's rally than the last few attempts is that while the strength is broad-based, the leadership is coming from financials, and not just the beaten-up long duration/tech stocks that have led to the downside."
Other news in the stock market today:
Until the light at the end of the tunnel is identified as the sun, and not an oncoming train, investors would be wise to be especially discriminating when considering any new positions. Value stocks continue to be a popular choice among the analyst community, for instance, as Wall Street continues to severely punish gaudily priced stocks at the faintest whiff of trouble.
Wells Fargo Investment Institute strategist Chris Haverland and analyst Austin Pickle suggest looking at more than just price, however.
"We believe multiples may continue to decline in the near term as investors price in the increasing likelihood of a recession," they say. "In this environment, we favor focusing on reasonably priced, high-quality U.S. companies with consistent revenue and earnings growth."
Investors looking for this blend of value and growth are looking for "GARP": growth at a reasonable price. By focusing on both traits, investors can improve their chances of avoiding both stocks at high risk of a valuation-related tumble, as well as companies that are merely cheap because their prospects are lacking. Read on as we explore seven great GARP stocks that fall into this happy middle ground.
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