Stocks rise, erasing S&P 500’s Tuesday losses
Technology companies led stocks on Wall Street broadly higher Wednesday, erasing the Standard & Poor’s 500’s losses from a day earlier.
Traders pivoted to riskier holdings as encouraging developments overseas helped alleviate investors’ anxiety over the global economy. Lawmakers in Britain were seeking a less chaotic exit from the European Union, and political tensions in Hong Kong eased.
The rally reversed Tuesday’s losses, when disappointing U.S. manufacturing data and an escalation in the U.S.-China trade war led to a sell-off.
“It was maybe a little bit of an overreaction yesterday to the manufacturing numbers, so that’s why we’re having a bounce back today,” said Karyn Cavanaugh, senior markets strategist at Voya Investment Management. “We had some good news on Hong Kong today, but just in general investors have to get used to the volatility.”
The S&P 500 climbed 31.51 points, or 1.1%, to 2,937.78. The Dow Jones industrial average rose 237.45 points, or 0.9%, to 26,355.47.
The Nasdaq, which is heavily weighted with technology stocks, climbed 102.72 points, or 1.3%, to 7,976.88. The Russell 2000 index of smaller-company stocks advanced 12.47 points, or 0.8%, to 1,484.76.
Even after finishing a turbulent August with a monthly loss, the benchmark S&P 500 index is down less than 3% from the all-time high it set in July.
Investors have been worried that the trade war and a slowing global economy could tip the U.S. into a recession. But traders set aside those concerns Wednesday, focusing instead on geopolitical developments.
Even though Wednesday’s news from Britain and Hong Kong gave U.S. stocks a lift, Tuesday’s weak U.S. manufacturing activity report remains a harbinger of an economic slowdown.
“Without any sort of catalyst to help turn sentiment around, we anticipate that continued weakness in the manufacturing sector is likely to bleed over into the consumer sector, which can then drag down the economy further,” said Peter Donisanu, investment strategy analyst at Wells Fargo Investment Institute.
The U.S.-China trade war has roiled markets this summer and has brought economic uncertainty that is a drag on companies. Negotiators from the U.S. and China are supposed to meet in September to continue trade talks.
In August the U.S. bond market reflected investors’ fears of a recession, but there were few such signs Wednesday.
Long-term bond yields fell below short-term ones in August, a so-called inversion in the U.S. yield curve that has frequently heralded previous recessions. But the long-term bond yields moved back above short-term ones Wednesday. The yield on the 10-year Treasury note rose to 1.47% from 1.46%. The yield on the two-year Treasury note fell to 1.44% from 1.46%.
Chipmakers, which have been at the mercy of trade-war volatility, did much of the heavy lifting for the technology sector Wednesday. Intel climbed 4.1%. Nvidia rose 2.8%. Apple, which relies on China as a key part of its supply chain, rose 1.7%.
Communication services, industrial and financial stocks also notched solid gains. Activision Blizzard climbed 4.8%, Honeywell gained 2.2% and Citigroup rose 1.4%.
Traders moved away from safer-play holdings. Utilities and real estate stocks, lagged behind the overall market, as did the healthcare sector.
Tyson Foods slid 7.8% after the meat producer slashed its 2019 profit forecast because of commodity costs and a fire at a beef processing plant. The company and its competitors are facing higher costs for animal feed such as corn because flooding delayed the planting season.
Tapestry climbed 5.1% after Chief Executive Victor Luis resigned from the upscale handbag maker less than a month after it warned investors about a profit slump. The company has been struggling with its Kate Spade brand, which it bought in 2017. It also owns the Coach brand.
Benchmark crude oil rose $2.32 to $56.26 a barrel. Brent crude oil, the international standard, rose $2.44 to $60.70 a barrel. Wholesale gasoline rose 6 cents to $1.53 a gallon. Heating oil climbed 8 cents to $1.88 a gallon. Natural gas rose 8 cents to $2.45 per 1,000 cubic feet.
Gold rose $4.40 to $1,550.30 an ounce, silver rose 31 cents to $19.39 an ounce and copper rose 7 cents to $2.58 a pound.
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