Stocks shake off an early loss, end higher as tech rebounds

Stocks shook off an early slide and closed higher Tuesday as Wall Street welcomed more modest moves in the bond market after a recent surge in Treasury yields weighed on the market.

The S&P 500 rose 0.9% after having been down 0.7% in the early going. The selling eased by afternoon, with technology stocks reversing course and turning higher. The benchmark index was coming off five straight losses and hadn’t had a winning day since the first trading day of the year, when it set an all-time high.

The Dow Jones Industrial Average rose 0.5% and the tech-heavy Nasdaq rose 1.4%. Smaller company stocks also bounced back, pushing the Russell 2000 1.1% higher.

Bond yields, which have risen sharply since the beginning of the year, edged lower. The yield on the 10-year Treasury fell to 1.74% from 1.77% late Monday. Yields affect interest rates on mortgages and other consumer loans.

The S&P 500 rose 42.78 points to 4,713.07, and the Dow added 183.15 points to 36,252.02. The Nasdaq rose 210.62 points to 15,153.45, while the Russell 2000 picked up 22.85 points to 2,194. The indexes are all in the red so far this month.

Traders are trying to calibrate how markets and the economy will handle the higher interest rates that are likely on the way from the Federal Reserve this year. That has weighed heaviest on pricey technology stocks, which become less attractive to investors as interest rates rise.

Technology stocks have been choppy since late Monday, when a late-afternoon rally for the sector trimmed much of the broader market’s losses. Apple rose 1.7% and chipmaker Nvidia rose 1.5%.

Communication stocks and a mix of retailers and other companies that rely on direct consumer spending rose. Facebook parent Meta Platforms gained 1.9% and Gap rose 3%.

Energy futures rose. The price of U.S. crude oil jumped 3.8%, helping boost energy stocks. Exxon Mobil rose 4.2%.

Utilities and other investments that are considered less risky fell.

The Fed has said it will accelerate the reduction of its bond purchases, which have helped keep interest rates low. The market now puts the chances of the Fed raising short-term rates by at least a quarter point in March at around 75%. A month ago, it was about 36%.

Investors will get two key reports on inflation this week from the Labor Department. The consumer price index for December will be released on Wednesday and give update on how inflation is driving the price of goods for consumers. An index based on U.S. wholesale prices in December will be released on Thursday and provide another update on how inflation is affecting costs for businesses.