Tech and energy stocks boost Wall St in bear market rally

Wall Street’s major indexes climbed on Tuesday as investors clawed back shares of megacap growth and energy companies that were hammered into a rout last week on concerns about a global economic slowdown.

All of the 11 major S&P sectors advanced in the near-term rebound. The S&P 500 and Nasdaq are still in a bear market, with the benchmark index down 21.6% from its January 3 closing high.

“We still view this as a rally in a bear market. Right now it’s just another one-day wonder and investors have seen this movie before,” said Ken Mahoney, chief executive of Mahoney Asset Management.

Energy was the main gainer, up 4.3%, after losing more than 17% last week. Apple Inc and Tesla Inc jumped 3.8% and 10.8%, respectively, boosting the S&P 500 and the tech-heavy Nasdaq.

“So while we have this rally today, I’m looking at the volatility index which is only slightly down, it’s not really buying that. There’s still quite a bit of nervousness around the markets.”

The CBOE Volatility Index, also known as the Wall Street Fear Gauge, was down to 29.94 points, its lowest level since June 15, but still well above its long-term average. of 19.6 points.

The S&P 500 index posted its biggest weekly percentage decline since March 2020 in the previous session, as investors worried that aggressive measures by global central banks to fight inflation could slow economic growth.

Markets priced in further rate hikes in July and September amid growing doubts about the ability of the US central bank to engineer a soft landing for the economy and avoid a recession.

Goldman Sachs now expects a 30% chance that the US economy will tip into recession over the next year, up from its previous forecast of 15%.

“The market may have already priced in a shallow recession…you had negative GDP in the first quarter, so it’s possible that the second quarter could be negative, in which case the recession could potentially be in the rearview mirror”, Thomas Hayes, member director of Great Hill Capital in New York said.

All eyes are now on Fed Chairman Jerome Powell’s testimony before the Senate Banking Committee on Wednesday for clues about future interest rate hikes.

As of 11:43 a.m. ET, the Dow Jones Industrial Average was up 550.36 points, or 1.84%, at 30,439.14, the S&P 500 was up 90.52 points, or 2.46%, at 3,765.36, and the Nasdaq Composite was up 323.46 points, or 3.00. %, at 11,121.81.

Kellogg Co climbed 4.1% after the breakfast cereal maker announced it was splitting into three separate snack-focused companies.

Spirit Airlines jumped 8% as JetBlue Airways sweetened its offer to convince the ultra-low-cost carrier to accept its offer over rival Frontier Airlines’ proposal.

Advancing issues outnumbered declining issues with a ratio of 4.86 to 1 on the NYSE and 3.59 to 1 on the Nasdaq.

The S&P index recorded a new 52-week high and 30 new lows, while the Nasdaq recorded 34 new highs and 69 new lows.

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