Gains were led by a rebound in megacap tech and tech-adjacent stocks, which sold off in recent sessions as benchmark Treasury yields climbed and investors worried the Fed might hike interest rates more aggressively than expected.
Despite the day’s gains, the S&P 500 and the Nasdaq posted their sixth consecutive weekly loss, the longest losing streak since fall 2012 for the S&P 500 and since spring 2011 for the Nasdaq. The Dow notched its seventh consecutive weekly dip, the blue chip average’s longest losing streak since late winter of 1980.
“Is this a dead cat bounce? Or is it a recognition by investors, as I believe, that the sell off is overdone?” said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York.
“I would not be surprised if we see one or two more down weeks, but you have to look past the indices and see the underpinnings of the market,” Pursche added. “And what we’re seeing today is some of the beaten-up quality names are really rebounding sharply.”
In the past six trading days, the Labour Department delivered four economic reports – wage growth, CPI, PPI and import prices – which together suggested inflation hit its apex in March, welcome news for market participants worried the Fed could spark a recession with a spate of inflation-fighting interest rate hikes.
Fed Chairman Jerome Powell, confirmed on Thursday by the US Senate to a second term, reiterated the central bank’s determination to battle inflation, but said he believes the economy can avoid a serious downturn.
The Dow Jones Industrial Average rose 1.47 percent, to 32,197, the S&P 500 gained 2.39 percent, to 4,024 and the Nasdaq Composite added 3.82 percent, to 11,805.
Shares of Twitter dropped 9.7 percent following Elon Musk’s tweet that he had put the US$44 billion cash buyout deal on hold, as he waits for the social media company to provide data on fake accounts. Tesla Inc jumped 5.7 percent.
Trading platform Robinhood Markets surged 24.9 percent after Samuel Bankman-Fried, the chief executive and founder of cryptocurrency exchange FTX, revealed a 7.6 percent stake in the brokerage app company. (Reuters)