Dow turns 567 point loss into 567 point gain as stocks rally
NEW YORK—U.S. stocks rallied Tuesday as a late surge helped them regain almost half their losses from the day before, when they had their biggest plunge in 6 ½ years. That came at the end of a day of huge swings for the market.
Major indexes in Asia and Europe took steep losses and U.S. markets started sharply lower, only to repeatedly change direction. After its 1,175-point nosedive Monday, the Dow Jones industrial average lost 567 points right after trading began. After numerous turns higher and lower, it wound up with a gain, coincidentally, of 567.
Despite the turbulence, Tuesday’s trading looked similar to the patterns that have shaped the market for the last year: investors bought companies that do well when economic growth is strongest. Gainers included technology companies, retailers like Amazon and Home Depot, and industrial companies and banks.
Bond yields turned higher after a sharp drop Monday. As a result, the biggest losses went to high-dividend companies such as utility and real estate companies, which investors often buy as an alternative to bonds. When bond yields rise, those stocks become less appealing to investors seeking income. The yield on the 10-year Treasury note rose to 2.80 percent from 2.71 percent.
The Dow finished 567.02 points higher, or 2.3 percent, at 24,912.77.
The Standard & Poor’s 500 index, a broader market barometer that many index funds track, climbed 46.20 points, or 1.7 percent, to 2,965.14. The Nasdaq composite rose 148.36 points, or 2.1 percent, to 7,115.88.
The steep drops Friday and Monday wiped out the gains the Dow and S&P 500 made since the beginning of the year, but both remain higher over the past 12 months. The Dow is up 24 percent over that time, the S&P 500 18 percent.
Even after Tuesday’s gain, the S&P 500 is still down 6.2 percent from the recent record high it set on January 26. That’s less than the 10 percent drop that is known on Wall Street as a “correction.”
Corrections are seen as entirely normal during bull markets, and even helpful in curbing excessive gains and allowing new investors to buy into the market at lower prices. It has been an uncommonly long time since the last market correction, which ended almost two years ago.
Friday’s U.S. jobs report showed wages grew at a faster pace in January, and investors worried that that means inflation is speeding up, and that the Federal Reserve will have to raise interest rates faster than previously expected in order to keep that inflation in check. Higher rates act like a brake on the economy by slowing down borrowing and lending.
U.S. crude oil fell 76 cents, or 1.2 percent, to close at $63.39 a barrel in New York. Brent crude, the benchmark for international oil prices, lost 76 cents, or 1.1 percent, to $66.86 a barrel in London.
Wholesale gasoline lost 4 cents to $1.81 a gallon. Heating oil dipped 3 cents to $1.99 a gallon. Natural gas added 1 cent to $2.76 per 1,000 cubic feet.