Wall Street’s main indexes climbed on Tuesday, as investors bought beaten-down megacap growth stocks after a three-day sell-off on concerns over aggressive monetary tightening and slowing economic growth.
All of the 11 major S&P sectors advanced in morning trade, led by a 2.4% rise in energy stocks and 2.2% gain in technology shares.
Amazon.com, Apple Inc, Google owner-Alphabet Inc, Tesla Inc and Microsoft Corp climbed between 1.3% and 2.5%.
Chipmakers added 2.7%, rebounding after a 10.6% fall over the past three sessions.
Yield on the benchmark 10-year Treasury note fell to 2.98% after hitting 3.2% in the previous session, its highest level since November 2018.
“The 10 year yield has backed off a little bit, that I think is helping technology stocks,” said Sam Stovall, chief investment strategist at CFRA.
“Tomorrow’s CPI report is expected to show a drop in the year-on-year gain, investors are probably feeling a little relieved that maybe March was the peak of this inflationary cycle.”
Data on Wednesday is expected to show consumer prices increased at a slower pace in April, with investors looking for clues on peaking inflation and the path of future rate hikes.
New York Fed President John Williams and Cleveland Fed President Loretta Mester both backed 50 basis point interest rate hikes at the next couple of meetings of the U.S. central bank.
On Monday, the benchmark S&P 500 index ended below 4,000 for the first time since late March 2021 and the tech-heavy Nasdaq dropped more than 4%.
Both the indexes have dropped over 15% and 24%, respectively, this year due to the Ukraine conflict, China’s COVID-19 lockdowns roiling global supply chains and rising bond yields as traders adjust to higher U.S. interest rates.
“It’s probably a short term relief rally. I don’t think that we are truly oversold just yet,” Stovall said.
At 09:57 a.m. ET, the Dow Jones Industrial Average was up 336.16 points, or 1.04%, at 32,581.86, the S&P 500 was up 51.95 points, or 1.30%, at 4,043.19, and the Nasdaq Composite was up 198.68 points, or 1.71%, at 11,821.93.
AMC Entertainment rose 3.5% after it posted better-than-expected quarterly revenue and a narrower loss, as the release of big-ticket films such as “The Batman” drew crowds to movie halls of the world’s largest theater chain.
Novavax Inc plunged 12.1% after the vaccine maker revealed a sharp drop in first-quarter COVID-19 research funding and said it shipped less than a fourth of the total vaccine deliveries slated for 2022.
Peloton Interactive Inc tumbled 19.0% as the fitness equipment maker warned the business was “thinly capitalized” after it posted a 23.6% slide in quarterly revenue.
Advancing issues outnumbered decliners for a 3.39-to-1 ratio on the NYSE and a 2.47-to-1 ratio on the Nasdaq.
The S&P index recorded one new 52-week high and 39 new lows, while the Nasdaq recorded 17 new highs and 625 new lows.
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