Key stock averages erased previous losses and traded higher on Wednesday as investors continued to pile in names sensitive to an economic comeback.
The Dow Jones Industrial Average rose 200 points after falling more than 100 points. The blue-chip Dow’s biggest winners were energy, industry and finance, including Boeing, Goldman Sachs, Chevron and Caterpillar. The S&P 500 rose 0.4%.
The tech-heavy Nasdaq Composite was down 1.3% and turned slightly positive. Tech stocks were sold earlier when the 10-year government bond yield surpassed 1.4%, reaching its highest level since February 2020. Higher interest rates could cause investors to switch from high-flyers to bonds while they could hinder growth companies, which benefited from the low-price environment. Apple, Microsoft, Amazon and Facebook are still in the red.
“Expect volatility along the way, and higher interest rates will continue to add risk to sectors and factors, but … stock market dips should be bought in this environment,” said Christopher Metli, a quantitative and derivatives strategist at Morgan Stanley said in a note.
Yields even rose after Federal Reserve Chairman Jerome Powell said in a Congressional hearing on Tuesday that inflation was “weak” and that the US economy was “far from our employment and inflation targets.”
Powell’s visit to Capitol Hill continued on Wednesday when he addressed the House of Representatives Financial Services Committee.
“Higher interest rates could dampen broad market gains, multipliers should compress, and the final phase of the early cycle themes could lead value to take the long-awaited leadership over growth,” said Ed Clissold, chief US strategist at Ned David Research. in a note.
The stock market made a big intraday comeback in the previous session after the Fed chief’s comments allayed some concerns about a pickup in price pressures and rising interest rates. The Dow and the S&P 500 offset heavy losses and close slightly higher. The Nasdaq Composite, which was down nearly 4% at one point, closed with a loss of just 0.5%.
Tesla shares rose 4.6% after Ark Invest’s Cathie Wood bought a ton more of their largest stake during the Tuesday sale. According to the company’s website, Wood bought more than $ 120 million worth of Tesla shares for the flagship Ark Innovation ETF.
Bitcoin, viewed by some as a barometer of speculation in the financial markets, rebounded above $ 50,000 on Wednesday after another purchase of Square’s cryptocurrency.
On Wednesday, Food and Drug Administration staff approved Johnson & Johnson’s emergency single-shot Covid-19 vaccine and brought a third vaccine to the US