Stocks advanced on Tuesday as technology stocks recouped some losses from Monday, when a rotation away from growth names picked up steam as concerns over inflation lingered.
The Nasdaq Composite gained 1.3% in its best day since August, after the index dropped over 2% a day earlier. The S&P 500 and Dow also closed higher.
Shares of technology heavyweight Facebook (FB) recovered and rose by 2.1% in its best day in five weeks. The stock had shed nearly 5% at the start of the week, as an hours-long platform outage added to a string of negative coverage raising further scrutiny of the social media giant.
Equity markets have faced a slew of concerns about the economy and policy landscapes heading into the final quarter of the year. Wall Street's anxiety over the debt-limit debates in Washington increased further, with Democratic and Republican lawmakers still struggling to reach an agreement to raise the federal government borrowing limit and avert what some policymakers have warned would be economy-wide disaster as soon as mid-month.
Investors are also awaiting signals from individual companies over how they have navigated supply chain challenges, rising labor costs and other pandemic-related pressures over the past several months, with third-quarter earnings season due to begin in earnest next week.
“The growth scare probably happened, and we’ve seen a better alignment of expectations for higher inflation and lower growth. But where earnings come into play … is that we’re still going to have pockets of really high price pressure that are going to make business hard for select areas,” Francis Donald, Manulife Global chief economist, told Yahoo Finance.
“We need to be watching the earnings season not necessarily because of its broad impact – of course that matters to the market — but because we really need to be in a stock-picker’s market where those who really understand these companies are seeing who’s going to get whacked by the supply chain issues, and who’s going to benefit from the underlying fundamentals that are improving going into 2022," she added.
Despite the plethora of headline risks to the market, a number of strategists have warned against becoming too pessimistic just yet.
“I don’t see this as the big one, the big pullback, where we’re going to go down 20% and get into bearish territory,” D.R. Barton, Jr., principal at Woodshaw Financial Group, told Yahoo Finance Live about Monday's equity decline. “We’re still awash in so much money – that overcomes so much other bad news, and I think that’s the one umbrella that’s still going to keep this market propped up for a while.”
Others offered a similar take.
"We think most of the dips here are buyable. I concur with the idea that the legs that the bull case stands on, which are accommodative policy, fiscal and monetary, plus just really strong corporate operators and a really strong consumer, are enough to outweigh the headline risks of a debt ceiling standoff or policy machinations," Ross Mayfield, Baird Investment strategy analyst, told Yahoo Finance Live.
4:03 p.m. ET: Nasdaq Composite jumps 1.3% in best day since August as tech stocks recover losses
Here were the main moves in markets as of 4:03 p.m. ET:
S&P 500 (^GSPC): +45.27 (+1.05%) to 4,345.73
Dow (^DJI): +311.75 (+0.92%) to 34,314.67
Nasdaq (^IXIC): +178.35 (+1.25%) to 14,433.83
Crude (CL=F): +$1.56 (+2.01%) to $79.18 a barrel
Gold (GC=F): -$7.20 (-0.41%) to $1,760.40 per ounce
10-year Treasury (^TNX): +4.8 bps to yield 1.5290%
12:23 p.m. ET: Stocks extend gains, Dow adds 350+ points, or 1%
A rebound rally was under way Tuesday afternoon, with each of the three major stock indexes up more than 1% shortly after noon in New York. The Nasdaq gained 1.5%.
The information technology and communication services sector outperformed in the S&P 500, marking a stark reversal from Monday's session when these areas were the biggest laggards. Energy and real estate were the only sectors in negative territory during intraday trading.
Goldman Sachs and Microsoft outperformed in the 30-stock Dow. Merck lagged to give back some gains after a four-session winning streak, which came on the heels of upbeat data from the drugmaker on its antiviral COVID-19 pill.
10:06 a.m. ET: U.S. service sector expands more than expected in September: ISM
Activity in the U.S. services sector expanded at a faster rate than expected in September, aided by a boost in new orders during the month and still-solid labor market conditions.
The Institute for Supply Management's September Services Index came in at 61.9, rising from 61.7 in August. This came in above consensus estimates for a reading of 59.9, according to Bloomberg consensus data. Readings above the neutral level of 50.0 indicate expansion in a sector.
One of the biggest contributors to the estimates-topping print in September came from new orders and order backlogs, which both accelerated during the month. Price paid by firms for materials and services also increased, tracking a rise in inflation seen across the economy over the past several months. And while an index tracking employment trends held in expansionary territory, it moderated slightly compared to August.
"The slight uptick in the rate of expansion in the month of September continued the current period of strong growth for the services sector," Anthony Nieves, chair of the institute for Supply Management Services Business Survey Committee, said in a statement. "However, ongoing challenges with labor resources, logistics, and materials are affecting the continuity of supply.”
9:32 a.m. ET: Stocks open higher
Here's where markets were trading just after the opening bell Tuesday morning:
S&P 500 (^GSPC): +19.51 points (+0.45%) to 4,319.97
Dow (^DJI): +135.38 points (+0.4%) to 34,138.30
Nasdaq (^IXIC): +81.11 points (+0.57%) to 14,341.92
Crude (CL=F): +$1.05 (+1.35%) to $78.67 a barrel
Gold (GC=F): -$14.70 (-0.83%) to $1,752.90 per ounce
10-year Treasury (^TNX): +2 bps to yield 1.501%
7:35 a.m. ET: PepsiCo posts 3Q results that top estimates, raises full-year sales forecast
PepsiCo (PEP) delivered third-quarter results that exceeded Wall Street's estimates, boosted by a rebound in the company's key North American beverage businesses. Shares rose more than 1% during the pre-market session.
Net revenue grew 12% over last year to $20.2 billion, topping expectations for $19.4 billion, based on Bloomberg consensus data. PepsiCo's Beverages North America business unit saw organic revenue, or sales excluding the impact of acquisitions and currency impacts, grow 7%, accelerating from the previous year's 3% growth rate.
“We are pleased with our results for the third quarter as we delivered very strong net revenue growth while carefully navigating a dynamic and volatile supply chain and cost environment," PepsiCo CEO Ramon Laguarta said in a press statement. "Given our year-to-date performance, we now expect our full-year organic revenue to increase approximately 8% and core constant currency earnings per share to increase at least 11%."
Previously, PepsiCo saw organic revenue growth of 6% for the full year.
7:20 a.m. ET Tuesday: Stock futures hold onto overnight gains, tech stocks aim to recoup some losses
Here's where markets were trading ahead of the opening bell Tuesday morning:
S&P 500 futures (ES=F): +14.75 points (+0.34%), to 4,306.00
Dow futures (YM=F): +123 points (+0.36%), to 33,993.00
Nasdaq futures (NQ=F): +46.75 points (+0.32%) to 14,509.00
Crude (CL=F): +$0.77 (+0.99%) to $78.39 a barrel
Gold (GC=F): -$11.90 (-0.67%) to $1,755.70 per ounce
10-year Treasury (^TNX): +2 bps to yield 1.501%
6:10 p.m. ET Monday: Stock futures steady after technology stock rout
Here's where markets were trading ahead of the opening bell Monday evening:
S&P 500 futures (ES=F): +2.5 points (+0.06%), to 4,293.75
Dow futures (YM=F): +10 points (+0.03%), to 33,880.00
Nasdaq futures (NQ=F): +20.75 points (+0.14%) to 14,483.00
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter