US stocks rise again as tech makes up more lost ground

Wall Street is strengthening again on Tuesday as big technology stocks wrest back more of their losses from their sudden belly flop earlier this month. The S&P 500 was 0.9per cent higher in early afternoon trading and back within 5per cent of its record set on Sept. 2. It's on pace for a second day of solid gains, on the heels of its worst week since June after the superstar tech stocks driving the market abruptly lost momentum.

The Dow Jones Industrial Average climbed 128 points, or 0.5per cent, to 28,122, as of 12:30 p.m. Eastern time. The Nasdaq was up 1.5per cent. Stocks in Europe and much of Asia also ticked higher following encouraging economic reports from around the world.

In China, retail sales were higher last month than a year earlier for the first such growth this year, after the pandemic pancaked the world's second-largest economy. In Europe's largest economy, a reading on German economic confidence rose more than expected.

In the United States, a report showed that industrial production also strengthened last month. But the growth wasn't as strong as economists were expecting. Other reports showed that manufacturing in the New York state is expanding more than economists expected, as are import and export prices. Treasury yields were holding relatively steady after giving up some of their earlier gains following the release of the report on industrial production.

The yield on the 10-year Treasury was at 0.68per cent, up from 0.67per cent late Monday. The 30-year yield ticked up to 1.43per cent from 1.41per cent. Shorter-term rates remain pinned at lower levels on expectations that the Federal Reserve will keep its benchmark rate at nearly zero for some time to help the economy recover.

The central bank is beginning its latest meeting on interest-rate policy Tuesday, and it will announce its decision on Wednesday. Economists say it could change some of the language around its existing pledge to buy bonds to support markets, but they expect no major news.

Big Tech stocks continued their recovery this week, with Apple up 1.9per cent, Microsoft up 1.7per cent and Amazon up 1.4per cent. Such stocks soared through much of the pandemic on expectations that their profits will boom as even more of daily life shifts online. But they suddenly lost altitude earlier this month amid worries that their prices had simply climbed too high, even after taking into account their tremendous growth.

Because these companies have grown so massive, their movements alone can dictate the market's performance more than ever. Tech stocks as a group account for nearly 28per cent of the S&P 500, and they're up 1.5per cent this week after slumping more than 4per cent in each of the prior two weeks. A flurry of buyout deals in the industry helped boost shares on Monday, including Nvidia's agreement to buy chipmaker Arm Holdings in a deal worth up to USD40 billion. Many critics and proponents alike agree that prices are high for tech stocks, but big corporate acquisitions mean at least some CEOs see value in buying at current prices despite the worries.

Nvidia rose another 0.5per cent after jumping 5.8per cent Monday. The market's gains were relatively widespread, with more than two thirds of the big stocks in the S&P 500 higher. Stocks of smaller companies were also making gains, and the Russell 2000 index of small-caps was up 0.5per cent.  

(Image Credits: AP)