NEW YORK, Feb 9 — Wall Street’s three main indexes rose more than 1 per cent today, bouncing back from a steep selloff this week that pushed the Dow Jones Industrial Average and the S&P 500 into correction territory.
Stocks had plunged 4 per cent on Thursday, sending the Dow and the S&P more than 10 per cent below their record highs on Jan. 26 and adding to the sense that rising US government bond yields had begun a major correction to nine years of near uninterrupted gains for Wall Street.
The yield on benchmark 10-year US Treasuries, which tends to be the driver of global borrowing costs, was hovering at 2.85 per cent, set to end the week little changed since hitting a near a four-year high of 2.885 per cent Monday.
“The fact that Monday’s lows were breached (yesterday) signals more trouble ahead and rallies are likely to give way to rising bond yields,” said Peter Cardillo, chief market economist at First Standard Financial in New York.
At 9:32am ET (1432 GMT), the Dow was up 346.11 points, or 1.45 per cent, at 24,206.57. The S&P was up 35.95 points, or 1.4 per cent, at 2,616.95 and the Nasdaq Composite was up 104.04 points, or 1.54 per cent, at 6,881.19.
Technology and financial stocks led advances on the S&P, while industrial stocks helped lift the Dow.
At the heart of this week’s pullback in the market has been a rise in US bond yields due to growing expectations that a robustly performing economy will lead to higher inflation and a steady rise in official interest rates over this year.
Investors also point to additional pressure from the violent unwinding of trades linked to bets on volatility staying low.
The market’s main gauge of volatility, the CBOE Volatility Index, was at 30.5 points on Friday, down 3 from Thursday and well below the two-and-a-half-year high of 50.30 on Tuesday.
The downturn in equities had been long awaited by investors, after a period of strong and fast gains. The S&P’s correction is the fifth of this bull market, according to Yardeni Research. The last bear market was during the 2008 financial crisis.
“We’re cheap now, but it’s just a matter of much more cheaper we have to get to attract buyers,” said Robert Pavlik, chief investment strategist at SlateStone Wealth.
With Wall Street’s quarterly earnings season more than half-way through, 78.3 per cent of the S&P 500 companies that have reported so afar have beaten profit expectations, above the 72 per cent beat-rate in the past four quarters.
Chipmaker Nvidia was up about 6.7 per cent in premarket trading after its upbeat results and forecast.
Expedia shares sank 14.5 per cent after the online travel services company said costs would outpace revenue growth this year as it battles rivals for market share.
FedEx and UPS dropped more than 1 per cent after the Wall Street Journal reported Amazon.com Inc will be launching its own delivery service.
Advancing issues outnumbered decliners on the NYSE by 2,097 to 377. On the Nasdaq, 1,981 issues rose and 438 fell. — Reuters