Wall Street Bounces as Tech Stocks Rise After Powell’s Testimony

Wall Street Bounces as Tech Stocks Rise After Powell’s Testimony
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, on Jan. 10, 2022. (Brendan McDermid/Reuters)

U.S. stock indexes reversed course on Tuesday as technology stocks recovered, with investors taking comfort in Federal Reserve Chair Jerome Powell’s testimony to Congress not delivering any major surprises.

Powell said the central bank’s plans to tighten monetary policy this year were not undercutting strong employment in an economy that “no longer needs or wants” massive stimulus.

“The reaction we’re getting today is a reflection of things that we already know,” said Art Hogan, chief market strategist at National Securities in New York.

At least three rate hikes are baked in to the market over the course of the last month and less of a surprise in the testimony is being taken as less of a negative, Hogan added.

The S&P 500 index is on course to break a five-day slump, while the Nasdaq is set to extend gains from Monday, as big tech stocks edged higher after being battered by rising bond yields.

Six of the 11 major S&P 500 sectors rose, with growth-heavy sectors like technology and communication services among the top performers.

Megacap growth companies including Apple Inc., Amazon.com Inc., Microsoft Corp., Tesla, and Meta Platforms Inc. gained up to 2 percent.

Marko Kolanovic, chief global markets strategist at JPMorgan Chase & Co., called the recent pull-back in riskier assets “arguably overdone” on Monday and said it presented investors with a buying opportunity.

Equity markets have been battered since the start of this year after the minutes from the Fed’s December meeting pointed to a sooner-than-expected rise in interest rates due to rising inflationary pressures.

Investors will eye key consumer inflation data on Wednesday, with the headline CPI expected to come in at a red-hot 7 percent on a year-on-year basis, adding to fears that it could sway the trajectory of the Fed’s interest rate hikes.

At 12:26 p.m. ET, the Dow Jones Industrial Average was up 15.92 points, or 0.04 percent, at 36,084.79, the S&P 500 was up 18.55 points, or 0.40 percent, at 4,688.84, and the Nasdaq Composite was up 158.33 points, or 1.06 percent, at 15,101.15.

The center-piece event of the week is the start of the fourth-quarter earnings season on Friday, with big banks expected to show an uptick in quarterly core revenue thanks to new lending and firming Treasury yields.

International Business Machines dropped 2.7 percent after UBS downgraded the stock to “sell” and slashed its price target.

Vaccine maker Moderna fell 4.2 percent after the World Health Organization said more research is needed to find out if existing COVID-19 vaccines provide adequate protection against the Omicron variant.

Casino operator Las Vegas Sands Corp. was among the top S&P 500 gainers, jumping 7.2 percent after J.P. Morgan upgraded the stock to “overweight.”

Advancing issues outnumbered decliners by a 2.08-to-1 ratio on the NYSE and by a 1.84-to-1 ratio on the Nasdaq. The S&P index recorded 16 new 52-week highs and no new low, while the Nasdaq recorded 27 new highs and 90 new lows.

By Bansari Mayur Kamdar and Shreyashi Sanyal