Wall Street's major indexes jumped more than 2% on Tuesday as investors picked up shares of megacap growth and energy companies after the stock market swooned last week due to worries over a global economic downturn.
All 11 major S&P 500 sectors gained, as stocks rebounded after the benchmark index last week logged its biggest weekly percentage decline since March 2020.
As the Federal Reserve takes aggressive measures to try to tamp down inflation, investors are trying to assess how far stocks can fall as they weigh risks to the economy. The S&P 500 fell over 20% from its January all-time high, which confirms the common definition of a bear market.
Do you think we have hit the bottom? I think we are going to see more volatility, and I think the bottoming process will take some time," said Kristina Hooper, chief global market strategist at Invesco. I think it is a good sign to see investor interest. The Dow Jones Industrial Average went up 641.47 points, or 2.15%, to 30,530. The S&P 500 gained 89.95 points, or 2.45%, at 3,764. The Nasdaq Composite gained 270.95 points, or 2.51%, at 11,069. The energy sector, the top-gaining S&P 500 sector this year, surged by 5.1% after tumbling last week. Every sector gained at least 1%.
The biggest individual boosts to the S&P 500 were given by the Megacap stocks Apple, Microsoft Corp, and Tesla Inc. Apple went up 3.3%, the number of Tesla rose 9.4% and Microsoft added 2.5%.
In a bid to stem a surge in inflation, the Fed approved its largest interest rate increase in more than a quarter of a century.
On Wednesday, investors are looking forward to Fed Chair Jerome Powell's testimony to the US Senate Banking Committee on Wednesday for information about future interest rate hikes and his latest views on the economy.
Chuck Carlson, the chief executive officer at Horizon Investment Services in Hammond, Indiana, said investors are trying to read the tea leaves to see how aggressive the Fed is going to get. Goldman Sachs believes that the US economy will go through a 30% chance of falling into recession over the next year, up from its previous forecast of 15%.
Kellogg Co shares went up about 2% after the breakfast cereal maker said it was splitting into three companies.
Spirit Airlines shares fell 7.9% after JetBlue Airways said on Monday it sweetened its bid to convince the ultra-low cost carrier to accept its offer over rival Frontier Airlines' proposal.
Advancers were favoring advancers because Advancing issues outnumbered decliners on the NYSE by a 2.66 to 1 ratio, and on Nasdaq, a 2.22 to 1 ratio.
In the last 20 sessions, 12.4 billion shares were changed hands in US exchanges, which is in line with the 12.4 billion daily average.