Wall Street sees losses reversed
Stocks closed broadly higher on Wall Street Tuesday, reversing a big slice of the market’s losses from a sharp sell-off the day before.
The rebound ended a five-day losing streak for the Dow Jones Industrial Average fueled largely by fears that the spread of a new virus in China could hamper global economic growth. The outbreak has killed more than 100 people, putting a chill on travel and tourism in China.
Investors placed their concerns about the virus’ potential economic impact on the back burner and snapped up stocks beaten down earlier in the week, particularly chipmakers and other technology companies. The sector notched the biggest gain Tuesday and powered much of the rally.
“There are always a few bargain hunters out there who will step in and start buying almost
immediately,” said Randy Frederick, vice president of trading & derivatives at Charles Schwab. “But I’m quite surprised that it’s been this quickly and that it has rebounded as much as it has.”
The S&P 500 index rose 32.61 points, or 1%, to 3,276.24. The Dow gained 187.05 points, or 0.7%, to 28,722.85. The Nasdaq climbed 130.37 points, or 1.4%, to 9,269.68. The Russell 2000 index of smaller company stocks picked up 14.18 points, or 0.9%, to 1,658.31.
Bond prices fell, sending yields higher following a significant drop a day earlier. The yield on the 10-year Treasury climbed to 1.65% from 1.60% late Monday.
Despite the rebound, the major U.S. indexes are still down for the week. The losses have hit smaller company stocks hardest, erasing the Russell 2000’s gains for the year.
U.S. stocks were running at all-time highs at the start of the month. An index measuring volatility in the market was running at 12month lows and the benchmark S&P 500 had climbed around 13% since early October after Washington and Beijing announced they would sign a preliminary trade deal.
That set the market up for a pullback, and investors’ jitters over the virus outbreak fit the bill.
“It may be symptomatic about how bullish overall people have been and how much money still sits on the sidelines,” Mr. Frederick said. “People are just looking for any opportunity to get a bargain right now, but it could ultimately end up being a little bit risky to do that.”
Apple was one of the big gainers in the technology sector Tuesday. The iPhone maker rose 2.8% and continued to climb in extended trading after it released quarterly results following the closing bell that topped analysts’ estimates.
Chipmakers also made solid gains. Intel added 2.5% and Nvidia rose 3.2%. Many of those companies are affected by China’s economy because they rely heavily on that nation for sales and supply chains.
Banks and other financial companies also climbed, along with communications stocks.