Stocks gave up part of their gains from earlier in the day but still closed higher on Wall Street Tuesday. Gains for big technology companies outweighed losses in banks and elsewhere in the market. The S&P 500 rose 0.5% after being up more than 1% earlier. It’s the second straight sizable gain for the benchmark index following its worst week since June. Big Tech stocks have been bouncing back this week after suddenly losing altitude earlier this month amid worries that their prices had climbed too high. Treasury yields held steady as the Federal Reserve began a two-day policy meeting.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story appears below.
Stocks were losing some of their early strength Tuesday afternoon, with gains in big technology companies outweighing losses in banks and elsewhere in the market.
The S&P 500 was 0.2% higher in afternoon trading and on pace for a second day of gains on the heels of its worst week since June after the superstar tech stocks driving the market abruptly lost momentum.
Big Tech stocks have been bouncing back this week, with Microsoft up 1.2% and Amazon up 1.6%, after suddenly losing altitude earlier this month amid worries that their prices had simply climbed too high, even after taking into account their tremendous growth.
But the factors that have powered their gains through much of the pandemic, namely expectations that their profits will boom as even more of daily life shifts online, haven't changed.
“The things that are doing well or are beneficiaries or are working in this environment, for good reason, are the things that are going up,” said Tom Martin, senior portfolio manager with Globalt Investments. “That isn’t going to change until we get a notable change in one of the things that are uncertain: The virus itself and the effect that’s having on the economy, and whether we get anything new on the fiscal stimulus front.”
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 28% of the S&P 500, and they’re up 2.9% this week after slumping more than 4% in each of the prior two weeks.
The Dow Jones Industrial Average was down 50 points, or 0.2%, to 27,941 after losing its gains from earlier in the day. The Nasdaq was up 0.8%. Stocks of smaller companies were also making gains, and the Russell 2000 index of small-caps was up 0.3%.
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 0.67%. The 30-year yield ticked up to 1.43% from 1.41%.
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.
On the losing side was Carnival, which dropped 11%. The cruise ship operator said it may sell up to $1 billion in stock to raise cash, and it reported a preliminary $2.9 billion loss for its latest quarter. More encouragingly, it also said its advance bookings for the second half of 2021 are similar to where booking positions were in 2018 for the second half of 2019, before the coronavirus pummeled the industry.
Financial stocks were also laggards. JPMorgan Chases fell 3%, losing an earlier modest gain. It trimmed its forecast for this year's net interest income, which measures how much profit it makes from interest payments for loans and other products after subtracting the interest it pays out on deposits.
In European stock markets, Germany’s DAX returned 0.2%, and the French CAC 40 rose 0.3%. The FTSE 100 in London climbed 1.3%. Markets in Asia ended mostly higher.