Tech rebound pulling stocks out of a slump

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

The S&P 500 gained 2% or 73.47 points to 3,841.94. The Dow Jones Industrial Average gained 572.16 points, or 1.9%, to 31,496.30. Earlier, it had been down 157 points. The Nasdaq composite climbed 196.68 points, or 1.6%, to 12,920.15. The tech-heavy index earlier flipped between a gain of 1.2% and a loss of 2.6%.

Smaller company stocks outgained the broader market, as they have all year. The Russell 2000 index picked up 45.29 points, or 2.1%, to 2,192.21.

Encouraging hiring news on Friday helped lift Treasury yields, with the closely watched 10-year yield momentarily topping 1.60%.

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

It remains well above its roughly 0.90% level at the end of last year.

Economists have been upgrading their forecasts for this year as more people get COVID-19 vaccines, businesses reopen and Congress gets closer to pumping another $1.9 trillion of financial aid into the economy.

The worry is that inflation could take off, or something else could happen to jack yields up even further.

It’s the speed at which Treasury yields have climbed that has gotten Wall Street so uncomfortable, more than the actual level, which is still low relative to history.

Energy producers made some of the largest gains on Friday. Diamondback Energy jumped 4.9%, and Chevron gained 4.3% after the price of U.S. crude oil rallied 3.5%.

Tech stocks would likely also see some improvement in their profits, just not to the same degree as companies whose businesses are closely tied to the strength of the economy, such as banks or travel companies.

But Big Tech stocks have grown so big that their movements can mask what’s going on in the broad market.

Five Big Tech stocks alone make up more than 21% of the S&P 500 by market value, so weakness for tech can hold back S&P 500 index funds even if many stocks within it are rising.