S&P 500 ends a 3-day losing streak
Stock indexes on Wall Street ended a choppy day of trading with a mixed finish Tuesday, after an afternoon rally in technology companies helped reverse an early slide.
The Standard & Poor’s 500 index closed 0.2% higher, snapping a three-day losing streak, after swinging between a gain of 1.9% and a loss of 0.8%. A day earlier, the benchmark index slumped 3.2%, hitting its lowest level in more than a year.
The Dow Jones industrial average slipped 0.3%, while the tech-heavy Nasdaq composite climbed about 1%.
Big technology stocks, which have been swinging sharply both up and down recently, helped counter losses elsewhere.
The market’s seesaw action came ahead of the release of the Labor Department’s consumer price index, a key economic report on inflation that investors will be closely watching as they try to gauge how aggressively the Federal Reserve will raise interest rates as it fights inflation.
Economists expect that growth in the index eased to 8.1% in the 12 months that ended in April. That would mark the first annual decline since August.
“If inflation is a lot lower, as they’re expecting it to be, then we may very well see the markets rally because perhaps people think the Fed won’t hike as much or as aggressively,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab.
The S&P 500 rose 9.81 points to 4,001.05. The Dow slipped 84.96 points to 32,160.74. The Nasdaq advanced 114.42 points to 11,737.67.
The Russell 2000 index of smaller companies fell 0.29 points, or less than 0.1%, to 1,761.79.
Big technology stocks accounted for much of the S&P 500’s turnaround. Apple rose 1.6% and Microsoft rose 1.9%.
Gains in communication and healthcare stocks also helped lift the market, outweighing declines in financial, real estate and other sectors.
Bond yields ended mixed. The yield on the 10year Treasury fell to 2.99% from 3.08% late Monday.
Treasury yields have been rising and stocks have been extremely volatile recently as Wall Street adjusts to an aggressive turnaround in the Federal Reserve’s policies away from supporting the economy. The central bank is raising interest rates from historic lows to fight persistently high inflation, which is at its highest levels in four decades.
The Fed has raised its benchmark rate from close to zero, where it sat for much of the coronavirus pandemic. Last week, it indicated it will double the size of future increases.
Higher prices for raw materials, shipping and labor have been cutting into corporate financial results and forecasts. Companies have been raising prices on many things, including clothing and food, causing concerns that consumers will cut spending, which would hurt economic growth.
Russia’s war in Ukraine has only increased worries about inflation. The conflict pushed already high oil and natural gas prices even higher, while putting more pressure on costs for key food commodities such as wheat and corn. U.S. crude oil prices fell 3.2% on Tuesday, but are up about 36% in 2022. Wheat prices are up more than 40% for the year.
Should Wednesday’s consumer price index show a pullback in inf lation versus a year earlier, that could put investors in a buying mood, at least for a little while.
“In the very short term we’re a bit oversold,” Frederick said. “So, if we could get ... below 8% year over year, I think we could get a little bit of a market rally.”
Still, most of the market’s recent rallies have been followed by a down day, he added.
Meanwhile, investors are also reviewing the latest round of corporate earnings data. Peloton tumbled 8.7% as the former pandemic darling of investors reported results that were much weaker than Wall Street was expecting. Food distributor Sysco rose 6.1% after beating analysts’ forecasts.
Migraine treatment developer Biohaven Pharmaceutical surged 68.4% after Pfizer said it would buy the company for $11.6 billion. Pfizer already owns a portion of the company.