Technology companies and banks helped propel stocks higher on Wall Street on Tuesday, as the market recovered from an early decline to more than makeup for the previous day’s losses.
The S&P 500 increased by 0.8% after falling by 0.4%. Moreover three-quarters of the equities on the benchmark index rose. The Dow Jones Industrial Average increased by 1.1%, while the Nasdaq Composite increased by 1.3%. Bond yields soared, with the 10-year Treasury yield reaching its highest level since before the pandemic started.
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The indices were all down in early trade but began to rise steadily around mid-morning. That turnaround gained traction as the S&P 500 rose over 4,500 points, a key “resistance level” that traders look for when attempting to predict the next direction of a stock or index.
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The S&P 500 climbed 37.67 points to 4,521.54. The index is now around 5.7% lower than its all-time high, which was reached on January 3. The Dow increased 371.65 points to 35,462.78, while the Nasdaq gained 178.79 points to 14,194.45. Smaller company stocks outperformed the overall market, possibly indicating that investors are bullish on economic growth. The Russell 2000 index increased 32.77 points, or 1.6%, to 2,045.37.
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This week’s trading has been fairly quiet, following weeks of volatility for key indices. Rising inflation, as well as the Federal Reserve’s plan to hike interest rates to combat it, have been major concerns for investors. Any rate hike would be a sharp contrast to the previous two years when ultra-low rates aided price increases in everything from stocks to cryptocurrencies.
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The 10-year Treasury note yield increased to 1.96%, its highest level since before the outbreak. Late Monday, the yield, which is used to set interest rates on mortgages and many other types of loans, was trading at 1.91%. Banks, which benefit from rising interest rates and bond yields, made significant gains. Bank of America increased by 1.8%. Raw material companies, such as steelmakers and paper mills, have also gained momentum.
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Technology companies accounted for a sizable portion of the S&P 500′s rally. Apple increased by 1.8%. Nvidia gained 1.5% after recovering from an early setback on its statement that it would cancel its deal to acquire chip designer Arm from Softbank. Retailers and other companies that rely on direct consumer spending also contributed to the market’s rise. Amazon.com increased by 2.2%, while Home Depot increased by 1.1%.
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The price of crude oil in the United States declined 2.1%, weighing on energy equities. Chevron dropped 1.5%. Peloton rose 25.3% after announcing a corporate reorganization that included the resignation of its co-founder as CEO and significant job cuts. Investors continued to react in a varied manner to the latest corporate earnings. Pfizer fell 2.8% after providing Wall Street with a dismal profit and revenue forecast. Harley-Davidson increased by 15.5% after posting an unexpected fourth-quarter profit.