Tech rebound pulls stocks out of a slump

Wall Street capped a volatile day of trading Friday with a broad rally that snapped the market’s three-day losing streak.

The S&P 500 gained 2 percent after clawing back from a 1 percent skid that followed a 1 percent surge at the start of trading. Other stock indexes went through similar zigzags but finished with solid gains.

The late-afternoon turnaround made up for some of the losses that the market began racking up after kicking off the week with the S&P 500’s biggest gain since June. The index, which briefly slipped into the red for the year on Thursday, managed to end the week 0.8 percent higher, its first weekly gain in three weeks.

The market’s latest gyrations came as investors struggled to figure out what an encouraging report on the economy and the recent march higher for bond yields should mean for the market.

“Ultimately, investors will conclude that they’ll be happy to take the bad with the good,” said Sam Stovall, chief investment strategist at CFRA. “The bad thing being higher interest rates and the good being an improvement in the economy.”

The spark for all the uncertainty Friday was a government report that showed employers added hundreds of thousands more jobs last month than economists expected. That’s an encouraging sign for the economy, and it helped lift Treasury yields, with the closely watched 10year yield momentarily topping 1.60 percent.

The yield later fell back from that midday spike and wound up at 1.56 percent, only slightly higher than a day earlier.

While the jobs report was encouraging in terms of jobs added by the economy, wage growth — an inflation bellwether — rose last month in line with expectations. That may have helped ease some bond investors inflation worries, at least for now.

Tech stocks soared more than the rest of the market for much of the pandemic and in the years preceding it. On Friday, Tesla was the heaviest weight dragging on the S&P 500. The stock fell 3.8 percent and is now down 15.3 percent so far this year.

It’s another reminder of how dominant Big Tech stocks have become in the market. If inflation does ultimately remain under control, as the Federal Reserve’s chair and many economists expect, the general expectation along Wall Street is that most stocks could benefit.

A stronger economy would mean bigger profits for companies, which would allow their prices to hold steady or rise, even if rates are climbing.