U.S. stocks ended higher on Tuesday after investors digested Fed Chair Jerome Powell comments that the central bank could go for bigger interest rate hikes in its coming policy meetings in order to put a check on surging inflation. All the three major indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) added 0.7% or 254.47 points to finish at 34,807.46 points.
The S&P 500 rose 1.1% or 50.43 points to close at 4,511.61 points. Almost all the sectors except energy finished in the green. Consumer discretionary, financial and tech stocks were the best performers.
The Consumer Discretionary Select Sector SPDR (XLY) gained 2.5%, while the Technology Select Sector SPDR (XLK) rose 1.4%. The Financials Select Sector SPDR (XLF) added 1.6%. Ten of the 11 sectors of the benchmark index ended negative territory.
The tech-heavy Nasdaq climbed 2% or 270.36 points to end at 14,108.82 points.
The fear-gauge CBOE Volatility Index (VIX) was down 2.51% to 22.94. Advancers outnumbered decliners on the NYSE by a 1.71-to-1 ratio. On Nasdaq, a 2.53-to-1 ratio favored advancing issues. A total of 12.14 billion shares were traded on Tuesday, lower than the last 20-session average of 14.5 billion.
Investors Digest Powell’s Comments
Monday saw all major U.S. benchmarks ending in the red after a volatile trading session following Powell’s comments. However, on Tuesday, despite starting on a low, investors gradually digested Powell’s hawkish comments made on Monday and St. Louis Fed President James Bullard’s remarks on Tuesday.
Powell said on Monday that rising inflation was a major concern and the Fed would take necessary steps in its coming policy meetings that could see steeper interest rate hikes of 0.5%, instead of the traditional 0.25%. The seme sentiments were echoed by Bullard during an interview on Tuesday. Bullard said that 50 basis point hikes should be in the mix when the Fed going for its next rate hikes.
This initially dampened investors’ sentiment but they gradually got back the confidence accepting that 50 basis point rate hikes may now be inevitable. This saw the 10-year Treasury yield climb to 2.392% at the session high, its highest level since May 2019.
Tech stocks still rallied, with shares of Meta Platforms, Inc.
FB
climbing 2.4%. Shares of Apple, Inc.
AAPL
gained 2.1, while Netflix, Inc.
NFLX
added 2.2%. Apple has a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
No major economic data was released on Tuesday.
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