Tech stocks lead indexes higher, Dow jumps 400

The floor of the New York Stock Exchange.
(Richard Drew / Associated Press)

Technology companies led a broad rally on Wall Street on Tuesday that drove the Dow Jones industrial average more than 400 points higher and gave the S&P 500 its best day in more than five months.

The gains also pushed the tech-heavy Nasdaq to an all-time high.

Investors welcomed a decision by China’s central bank to inject $57 billion into its markets. The move is the latest step by Beijing to soften the financial blow of the recent coronavirus outbreak. Worries about the potential global economic impact of a protracted outbreak rattled markets in recent weeks, erasing the S&P 500’s gains last month.

“If China’s going to do what they can to support their markets, then maybe we don’t have as much cause for concern for our markets,” said Willie Delwiche, investment strategist at Baird.


Apple and Microsoft were among the tech-sector standouts. Like other major technology companies, they rely heavily on doing business with China. Healthcare, industrial, financial stocks also notched solid gains.

The S&P 500 index rose 48.67 points, or 1.5%, to 3,297.59. It was the index’s biggest single-day gain since early August. The Dow climbed 407.82 points, or 1.4%, to 28,807.63.

The Nasdaq gained 194.57 points, or 2.1%, to 9,467.97, a record high.

China’s latest measure to shore up its markets follows an announcement from Monday that the government would put $173 billion into its markets as they reopened from an extended break.

The world’s second-largest economy is in a lockdown that is threatening economic growth there and globally. More companies, including Sony, are warning investors of a potential hit to revenue and profit because of the virus. More than 20,000 cases have been confirmed globally, along with over 400 deaths. The cases have been mostly in China.

The moves by China signal to investors around the globe that the country’s leadership is doing what it can to provide liquidity to their economy, Delwiche said.

“That limits some of the worst-case views that were out there from a financial perspective,” he said.


The bond market was also signaling more confidence among investors Tuesday. The yield on the 10-year Treasury jumped to 1.60% from 1.52% late Monday. Perhaps more importantly, the 10-year yield also jumped above the three-month Treasury yield of 1.56%.

The leapfrog move silenced a recession warning that had been ringing in the bond market, at least for now. Yields for short-term Treasuries are rarely higher than for longer-term Treasuries, and when it does happen, a rule of thumb says a recession may be on the way in about a year or so. This recession warning signal, which has a fairly accurate but not perfect history, had begun flashing in recent days on worries about the virus for the first time since October.

Rising expectations of further rate cuts by the Federal Reserve may have also helped lift stocks. Investors now foresee an overwhelming likelihood of at least one Fed rate cut this year, with nearly half expecting two cuts, according to data from CME Group.

The Fed has recently indicated that it’s comfortable with rates at their current level. But traders seem to expect that economic anxiety and damage resulting from China’s viral outbreak will lead the Fed to further ease borrowing rates.

Wall Street continued to assess another busy round of corporate earnings Tuesday. Ralph Lauren jumped 9.2% and Clorox gained 5% after reporting solid financial results. Shares in Google’s parent, Alphabet, dropped 2.5% after the company gave investors a disappointing revenue report.

Traders also continued to drive up shares in Tesla, pushing the stock 13.7% higher, following a 19.9% surge on Monday. The electric vehicle maker reported strong fourth-quarter sales last week and its second-straight quarterly profit.


Shares in EBay jumped 8.8% after the Wall Street Journal reported that the owner of the New York Stock Exchange has offered to buy the online marketplace for more than $30 billion, citing unnamed people familiar with the matter. The owner of the NYSE, Intercontinental Exchange, slumped 7.4%.

Cruise ship operators steamed forward as Royal Caribbean climbed 1.3% after taking tougher measures to screen and restrict passengers amid the virus outbreak, including canceling eight cruises in China. The cruise line also gave Wall Street a solid quarterly earnings report and profit forecast for the new fiscal year. Carnival rose 1.9% and Norwegian Cruise Line gained 1%.

Benchmark crude oil fell 50 cents to settle at $49.61 a barrel. Brent crude oil, the international standard, dropped 49 cents to close at $53.96 a barrel.

Gold fell $26.80 to $1,550.40 per ounce and silver fell 11 cents to $17.53 per ounce.

The dollar rose to 109.51 Japanese yen from 108.67 yen on Monday. The euro weakened to $1.1042 from $1.1063.