Technology companies and banks helped drive stocks higher on Wall Street Tuesday, as the market bounced back from an early slide to more than make up its losses from the day before.
The S&P 500 rose 0.8 per cent after having been down 0.4 per cent. More than three fourths of the stocks in the benchmark index notched gains. The Dow Jones Industrial Average rose 1.1per cent and the Nasdaq composite gained 1.3 per cent.
Bond yields rose, lifting the 10-year Treasury yield to the highest level since before the pandemic began.
Stocks regain ground
The indexes were all down in early trading but turned solidly higher around midmorning. That turnaround gained momentum after the S&P 500 crossed above 4,500 points, an important “resistance level,” something traders watch for when trying to guess the direction that a stock or index will move next.
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The S&P 500 rose 37.67 points to 4,521.54. The index is now about 5.7per cent below the all-time high it set Jan. 3.
The Dow gained 371.65 points to 35,462.78, and the Nasdaq rose 178.79 points to 14,194.45.
Smaller company stocks outpaced the broader market in a potential sign that investors are optimistic about economic growth. The Russell 2000 rose 32.77 points, or 1.6 per cent, to 2,045.37.
Rising inflation and the Fed's plan to raise interest rates to fight it have been key concerns for investors. Any increase in rates would mark an abrupt turnaround from much of the last two years, when ultra-low rates helped prices surge for everything from stocks to cryptocurrencies.
The latest report on consumer prices from the Labour Department on Thursday will give Wall Street another update on just how much inflation is hitting consumers' wallets. Economists expect a 7.3 per cent rise in inflation in January, which would show that inflation remains at its highest levels in four decades. That could add to concerns over how often the Fed moves to raise rates this year.
Tuesday's afternoon market rebound could suggest investors are assuming that the consumer price index report will show a smaller-than-expected increase, Stovall said.
The yield on the 10-year Treasury note rose to 1.96per cent, its highest level since before the pandemic. The yield, which is used to set interest rates on mortgages and many other kinds of loans, traded at 1.91per cent late Monday.
Banks, which benefit from higher interest rates and rising bond yields, made solid gains. Bank of America rose 1.8per cent. Raw materials companies, including steelmakers and paper producers, also gained ground.
Technology companies accounted for a big slice of the S&P 500's rally. Apple rose 1.8per cent.
Retailers and other companies that rely on direct consumer spending also helped lift the market. Amazon.com rose 2.2per cent and Home Depot gained 1.1per cent.
The price of U.S. crude oil fell 2.1 per cent and weighed down energy stocks. Chevron fell 1.5 per cent.
Investors continued reviewing the latest corporate earnings with mixed reactions. Pfizer fell 2.8 per cent after giving Wall Street a discouraging profit and revenue forecast. Harley-Davidson jumped 15.5 per cent after reporting a surprising fourth-quarter profit.