Stocks finish higher, gain back bit of lost ground

NEW YORK — Stocks finished broadly higher on Wall Street Tuesday, clawing back some of the ground they lost in their worst weekly drop since the beginning of the pandemic.

The rally to start the holiday-shortened week came as investors look ahead to what Federal Reserve Chair Jerome Powell will tell Congress on Wednesday, the first of two days of testimony as part of the central bank’s semi-annual monetary policy report. Last week, the Fed hiked its key short-term interest rate by the most since 1994, the central bank’s latest effort to tame the worst inflation in 40 years.

The S&P 500 rose 2.4%, recouping about 40% of its losses last week. More than 85% of the stocks in the benchmark index gained ground. The Dow Jones Industrial Average rose 2.1% and the Nasdaq climbed 2.5%.

“This is a little more of an oversold bounce that the market is looking at and trying to figure out what is the path the Federal Reserve is actually going to navigate,” said Rob Haworth, senior investment strategist at U. S. Bank Wealth Management.

Technology stocks had some of the strongest gains. Apple rose 3.3% and Microsoft rose 2.5%.

Retailers, health care companies and banks also made solid gains. Kellogg rose 2% after it said it would split into three companies. Spirit Airlines jumped 7.9% after JetBlue sweetened its buyout offer for the budget airline.

European markets ended mostly higher, while Asian markets closed mixed overnight. The yield on the 10-year Treasury rose to 3.30% from 3.23% late Friday. Markets were closed Monday for the observation of Juneteenth.

All told, the S&P 500 rose 89.95 points to 3,764.79. The index remains stuck in a slump, though, along with every other major index, and is still down 21.5% from the record high it set in January. It’s posted a weekly loss in 10 out of the last 11 weeks.

The Dow rose 641.47 points to 30,530.25, while the Nasdaq added 270.95 points to 11,069.30.

Smaller company stocks also gained ground. The Russell 2000 rose 28.34 points, or 1.8%, to 1,694.03.

Stocks have been mostly sliding in recent weeks as investors adjust to higher interest rates that the Federal Reserve and other central banks are increasingly doling out. The aggressive rate hikes are part of a plan to temper record-high inflation, but investors are worried that the Fed risks slowing economic growth too much and bringing on a recession.