Major U.S. benchmarks staged a late session comeback on Tuesday as investors rushed to buy beaten-down tech stocks reversing a sharp sell-off earlier in the day. This saw the Dow bouncing back more than 1,000 points, its biggest U-turn ever, to end in the green. All the three major indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.3 % or 99.13 points to end at 34,364.50 points. The blue-chip index staged a dramatic comeback by bouncing as much as 1,214.17 points after hitting a low of 33,150.33 points during the session. This is the first time that the Dow has finished in positive territory after being down by more than 1,000 points. Also, the index ended its six-day losing streak.
The S&P 500 gained 0.3% or 12.19 points to close at 4,410.13 points after declining to a level that qualifies as a correction. The index was down more than 4% at one point of the day but bounced back to record its best comeback in terms of percentage gains in Oct 23, 2008. Consumer discretionary, communication services, energy, industrials and technology stocks were the best performers.
The Consumer Discretionary Select Sector SPDR (XLY) advanced 1.2%, while the Communication Services Select Sector SPDR (XLC) gained 0.7%. The Energy Select Sector SPDR (XLE) and Industrials Select Sector SPDR (XLI) rose 0.7% and 0.6%, respectively. The Technology Select Sector SPDR (XLK) increased 0.5%. Eight of the 11 sectors of the benchmark index ended in positive territory.
The tech-heavy Nasdaq climbed 0.6% or 86.21 points to close at 13,855.13 points, snapping its four-day losing streak. Shares of Meta Platforms, Inc. FB gained 1.8%, while Alphabet Inc. GOOGL rose 0.4%. Alphabet has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The fear-gauge CBOE Volatility Index (VIX) was up 3.64% to 29.90. A total of 18.42 billion shares were traded on Monday, higher than the last 20-session average of 10.95 billion. Decliners outnumbered advancers on the NYSE by a 1.49-to-1 ratio. On Nasdaq, a 1.08-to-1 ratio favored declining issues.
Tech Stocks Bounce Back to Lift Markets
It has been a great start to the year, with stocks taking a hit. Rising rates have been a concern that has been taking its toll on the high-growth tech stocks. Monday wasn’t any different as investors began to dump tech stocks as they feared that the Fed will soon start tightening its monetary policy.
However, as the day progressed, investors flocked to buy tech stocks, with all the three major indexes making a dramatic comeback in the final 10 minutes of the session to end in positive territory. Even then the S&P 500 is 7.5% down this month.
Investors are now keeping a close watch on the Fed’s two-day policy meeting that begins on Tuesday. Investors will be looking for any signs on how much the Fed is likely to hike interest rates and when it is expected to start.
Expectations are that the Federal Open Market Committee might not hike rates in its January meeting but will gear up to start hiking rates from March. The central bank is also likely to wrap up its monthly asset purchase program from that month, thus setting the tone for the rest of the year.
No economic data was released on Monday.
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