Stocks climb after three days of losses, led by Big Tech

Wall Street followed up a three-day losing streak with a broad stock market rally Thursday powered by Big Tech companies and banks.

The S&P 500 notched a 1.2% gain, clawing back almost half of its loss from a day earlier, when it had its biggest one-day drop since February. Even so, the benchmark index is on track for a 2.8% weekly decline, which would be its largest since January. The other major indexes were also on pace for sharp weekly declines, despite recouping some of their losses.

Technology stocks, which were hurt badly earlier in the week as investors fretted about signs of rising inflation, were among the bigger gainers. Apple, Microsoft, Facebook and Google’s parent company all rose. Financial companies also did well. JPMorgan Chase, Charles Schwab and Capital One Financial each rose more than 2%.

In a switch from Monday, the energy sector was the only loser in the S&P 500 as oil prices fell sharply. It’s not uncommon for markets to reverse direction after sharp gains or losses over a period of days as investors reassess markets and pause during periods of volatility.

“Investors have kind of gotten conditioned about when there’s volatility and when there are pullbacks: step in and buy the dip, and you will be rewarded in short order,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.

The S&P 500 gained 49.46 points to 4,112.50. The Dow Jones Industrial Average rose 433.79 points, or 1.3%, to 34,021.45. The Nasdaq, which is heavily weighted with technology stocks, climbed 93.31 points, or 0.7%, to 13,124.99.

Smaller company stocks, which for most of this year had outgained the broader market, also recovered some of their losses from earlier in the week. The Russell 2000 index picked up 35.81 points, or 1.7%, to 2,170.95.

Recent economic reports have left many investors uneasy. Last week’s jobs report showed fewer employers hiring than had been expected, and on Thursday the government reported that wholesale prices jumped 0.6% last month, driven by higher costs for services and food. That was more than expected and the latest indication that inflation pressures are mounting.

Rising prices reflect growing economic activity after last year’s global shutdown to fight the coronavirus pandemic. However investors worry inflation might disrupt the recovery or prompt central banks to withdraw stimulus and near-zero interest rates.