U.S. stocks rose again on Tuesday as Wall Street appeared to be finding its footing after a rough start to the new year.
The tech-heavy Nasdaq Composite rose 1.2%, extending the previous session’s afternoon rally and snapping a four-day losing streak. The S&P 500 gained 0.7%, while the Dow Jones Industrial Average gained 140 points, or 0.4%.
Stocks have been volatile since the start of the year as rising interest rates weighed on the stock market. However, interest rates cooled on Tuesday, with the 10-year U.S. Treasury yield slipping to 1.76%.
“The bottom line is that this is just an easing of some of the extreme sell-offs we’ve experienced over the past few weeks, really since the beginning of the year,” said Jeff Mills, chief investment officer at Bryn Mawr Trust Wealth Management.
“I think it’s probably too early to call this some sort of bottom in tech. I think you can get at least a day of reprieve given the movement in interest rates,” Mills added.
Big tech stocks helped support the broader market, with Amazon up more than 2% and Apple and Nvidia each up about 1.5%.Other notable winners include illumination, shares rose 14% after the genome-sequencing company released a better-than-consensus 2022 revenue outlook.
Elsewhere, shares of Exxon Mobil rose more than 3% as U.S. oil prices topped $80 a barrel. Home fitness stock Peloton rose more than 7%.
Federal Reserve Chairman Jerome Powell testified before a Senate committee on Tuesday as part of his reconfirmation process. Powell said he expected supply chain normalization to help ease inflationary pressures in 2022, but said the Fed would not be afraid to raise interest rates further than expected if inflation remained high.
“If we have to raise rates further over time, we will. We will use our tools to restore inflation,” Powell said.
However, stocks and bonds were both higher during Powell’s testimony as he did not announce that the central bank had already signaled an accelerated change in policy.
“Powell noted that the balance sheet runoff will occur later in 2022 and that there is ‘a long way to go to get back to normal’. On a net basis, the chairman’s comments are consistent with a willingness to deliver a rate hike in March, provided that It’s no drama, BMO’s Ian Lyngen said in a note to clients.
While there may be a pullback in stocks this year — and last week’s action could be a start — strong corporate fundamentals will cope, said Jim Paulson, chief investment strategist at The Leuthold Group.
“Historically, the stock market has had some nasty ‘grumpy’, with multiple rate hikes culminating in a recessionary bear market,” Paulson said in a note Monday night. “However, investors’ current focus may be misplaced. The stock market’s reaction may be related to the timing and number of rate hikes rather than the ‘direction’ of actual earnings.”
Tuesday’s market moves followed a sharp rally Monday afternoon, with the Nasdaq reversing a 2.7% loss to end slightly higher and snap a four-day losing streak.