Dow climbs 350 factors because the rally is selecting up tempo in restoration, Boeing up 6%
The stock market made another big intraday comeback on Wednesday as investors continued to pile on names sensitive to an economic comeback while leaving the risk of rising interest rates behind.
The Dow Jones Industrial Average reversed a loss of 110 points and rose 320 points, driven by strong performance in the energy, industrial and financial sectors. Boeing was up 6.2% while Chevron was up 3.4%. Goldman Sachs, American Express and Caterpillar each gained more than 2%. The S&P 500 gained 0.9%.
The tech-heavy Nasdaq Composite was down 1.3% and up 0.7%. Technology stocks were sold earlier when the 10-year government bond yield surpassed 1.4%, reaching its highest level since February 2020. Higher interest rates could cause investors to switch from high-flyers to bonds, while they could hinder growth companies, which benefited from the low-price environment. Apple, Microsoft, Amazon and Facebook have all hit their lows but are still in the red.
“Expect volatility along the way and higher interest rates will continue to add more risk to sectors and factors, but … stock market dips should be bought in this environment,” said Christopher Metli, a quantitative and derivatives strategist at Morgan Stanley said in a note.
Yields even rose after Federal Reserve Chairman Jerome Powell said in a Congressional hearing on Tuesday that inflation was “weak” and that the US economy was “far from our employment and inflation targets.”
In his testimony before the House of Representatives Financial Services Committee on Wednesday, the Fed chief further downplayed the inflation threat, saying it could take three years for the central bank to consistently achieve its target.
Powell added that inflation could be volatile as the economy re-opens and demand increases. But he doesn’t expect inflation to get hot, and said the central bank has the means to fight it if it should.
The stock market reversed sharply in the previous session after the Fed chief’s reluctance to speak of rising inflation and interest rates eased. The Dow and the S&P 500 offset heavy losses and close slightly higher. The Nasdaq Composite, which was down nearly 4% at one point, closed with a loss of just 0.5%.
“Higher rates could dampen broad market gains, multipliers should compress, and the final phase of the early cycle themes could lead value to take the long-awaited leadership over growth,” said Ed Clissold, chief US strategist at Ned David Research. in a note.
Tesla shares rose 4.6% after Ark Invest’s Cathie Wood bought a ton more of their largest stake during Tuesday’s sale. According to the company’s website, Wood bought more than $ 120 million worth of Tesla shares for the flagship Ark Innovation ETF.
Bitcoin, viewed by some as a barometer of speculation in the financial markets, rebounded above $ 50,000 on Wednesday after another purchase of Square’s cryptocurrency.
On Wednesday, Food and Drug Administration officials approved Johnson & Johnson’s emergency single-shot Covid-19 vaccine and brought a third vaccine to the US