U.S. Stocks Recover From Early Weakness To Close Notably Higher
After moving to the downside early in the session, stocks showed a significant turnaround over the course of the trading day on Tuesday. The major averages extended the recovery seen in the previous session, with the tech-heavy Nasdaq posting a particularly strong gain.
The major averages moved roughly sideways going into the close, hovering in positive territory. While the Nasdaq surged 210.62 points or 1.4 percent at 15,153.45, the S&P 500 advanced 42.78 points or 0.9 percent to 4,713.07 and the Dow rose 183.15 points or 0.5 percent at 36,252.02.
With the strong upward move on the day, the Nasdaq climbed further off the nearly three-month intraday low set on Monday.
The turnaround on Wall Street came after Federal Reserve Chair Jerome Powell testified before a Senate Banking Committee hearing on his nomination for another term.
In prepared remarks, Powell highlighted elevated inflation as a result of supply chain issues and said the Fed would use all of its tools to prevent higher inflation from becoming entrenched.
“We can begin to see that the post-pandemic economy is likely to be different in some respects,” Powell said. “The pursuit of our goals will need to take these differences into account.”
He added, “To that end, monetary policy must take a broad and forward-looking view, keeping pace with an ever-evolving economy.”
Powell later told the committee the Fed would be willing to raise interest rates more than currently expected to combat inflation.
While Powell’s remarks have been described as “hawkish,” they are not seen as indicating the Fed will be more aggressive than already suggested by the minutes of the central bank’s latest meeting.
Treasury yields moved to the downside in reaction to Powell’s testimony, with the benchmark ten-year yield continuing to give back ground after reaching its highest intraday level since January 2020 on Monday.
Energy stocks moved sharply higher on the day, benefiting from a substantial increase by the price of crude oil. Crude for February delivery spiked $2.99 to $81.22 a barrel.
Reflecting the rally by energy stocks, the Philadelphia Oil Service Index soared by 4.3 percent and the NYSE Arca Oil Index shot up by 3.5 percent.
Significant strength also emerged among gold stocks, as reflected by the 2.1 percent jump by the NYSE Arca Gold Bugs Index.
The strength in the gold sector came amid a notable increase by the price of the precious metal, with gold for February delivery surging $19.70 to $1,818.50 an ounce.
Housing, airline, and semiconductor stocks also saw considerable strength on the day, while interest rate-sensitive utilities stocks moved to the downside.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan’s Nikkei 225 Index slid by 0.9 percent, while China’s Shanghai Composite Index declined by 0.7 percent.
Meanwhile, the major European markets showed a notable rebound following recent weakness. While the U.K.’s FTSE 100 Index rose by 0.6 percent, the French CAC 40 Index and the German DAX Index jumped by 1 percent and 1.1 percent, respectively.
In the bond market, treasuries moved to the upside in afternoon trading after showing a lack of direction earlier in the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.4 basis points to 1.746 percent.
A report on consumer price inflation is likely to attract attention on Wednesday along with the Fed’s Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts.
Source: Read Full Article