Oil prices moved higher after OPEC+ stuck to plans to add crude to the market in November.
Apu Gomes / AFP via Getty Images
Big Tech did an about-face Tuesday, closing higher after a miserable Monday.
Facebook, one of the selloff’s biggest losers, clawed back some of its losses even though the company was under fire by a whistleblower on Capitol Hill.
Outside the tech sector, companies bounced back partly on strong economic data.
The Dow Jones Industrial Average advanced 313 points, or 0.9%, after the benchmark fell 323 points Monday. The S&P 500 gained 1%, while the tech-heavy Nasdaq Composite, which bore the brunt of Monday’s selling, rose 1.2%.
Big tech clearly led the charge. The Nasdaq closed at 14,255 Monday. That’s roughly a level where buyers tend to come back in and give tech stocks a boost. The last time the index fell to near that level—July—it promptly rose.
“The move yesterday in tech, specifically, seemed to get a bit overdone to the downside,” writes Michael Reinking, senior market strategist at New York Stock Exchange.
Tech stocks have been hit by rising bond yields, which have jumped since the end of September. Higher yields make future profits less valuable and many tech companies are looking for big profits many years down the road.
“While the valuation debate will continue to be front and center in a rising rate environment, we fundamentally believe the Street is massively underestimating what the tech growth picture looks like into 2022 and thus remain a core tenet of our unwavering tech bull thesis with this another pound the table moment to own tech stocks,” wrote Dan Ives, analyst at Wedbush Securities.
Facebook (ticker: FB) has been facing mounting regulatory and reputational concerns following the leak of internal documents by a whistleblower to The Wall Street Journal. Monday, it experienced outages on several of its platforms.
Facebook stock rose 2.1% on Tuesday, with Amazon.com (AMZN) and Apple (AAPL) up 1% and 1.4%, respectively. Recently, a rotation into value stocks—and out of fast-growing technology stocks—has taken hold as rising bond yields signify increased confidence in economic growth, which is a particular boost to value shares.
On Tuesday, the Institute for Supply Management’s Services Index showed a reading of 61.9 for September, ahead of estimates of 60. This helped push non-tech stocks—and the overall market—higher. More than 80% of S&P 500 stocks were on the rise, according to FactSet.
Overseas, Tokyo’s Nikkei 225 fell 2.2% as traders reacted to the poor performance on Wall Street, while in Europe stocks were rebounding as the pan-European Stoxx 600 rose 1.2%.
The price of oil advanced after the OPEC+ group of state producers agreed yesterday to keep to plans for increasing crude output by 400,000 barrels a day in November. Prices were elevated again Tuesday, with futures contracts for WTI crude oil up 2% to more than $79 a barrel.
The selloff Monday was felt broadly and came on the back of familiar pressures, with a 1.3% decline on the S&P 500 marking the third time in five sessions that it has lost more than 1%. Investors remained concerned about inflation, supply-chain issues pinching earnings, the future of central bank stimulus, and U.S. political friction over the debt ceiling and the $3.5 trillion reconciliation package stuck in Congress.
Despite today’s gains, the stock market isn’t necessarily finished with its slide. The S&P 500 hasn’t had seen a decline close to a formal correction—defined as a 1055 drop—since September of 2020. Plus, the CBOE Volatility Index (VIX), a measure of the degree to which stock prices will swing in either direction in the future, is still fairly low, reading 21. Selloffs tend to continue until the index hits at least 28, wrote Nicholas Colas, Datatrek co-founder. “We remain near term cautious on US/global equities,” Colas said. Bottoms form when… the VIX goes to +28.”
Here are nine stocks on the move Tuesday:
High crude prices look to have boosted major oil companies, with BP
(BP) up 1.5% and Royal Dutch Shell (RDS.A) rising 2% in London. Marathon Oil (MRO) gained 3.7%.
PepsiCo (PEP) stock gained 0.6% after reporting a profit of $1.79 a share, beating estimates of $1.73 a share, on sales of $20.2 billion, above expectations for $19.4 billion.
Ocugen (OCGN) stock rose 2.7% after the company announced supply agreements for its Covid-19 vaccine candidate and its treatment for macular degeneration.
Digital Realty Trust (DLR) stock fell 1.9% after getting downgraded to Neutral from Outperform.
Albertsons Cos . (ACI) stock dropped 2.1% after getting downgraded to Underperform from Market Perform at BMO.
Columbia Sportswear Co . (COLM) stock dropped 4.5% after getting downgraded to Neutral from Buy at Bank of America.
AstraZeneca (AZN) rose 0.3% in London after the pharmaceutical company submitted an emergency-use authorization request to the Food and Drug Administration for a preventative treatment of symptomatic Covid-19.
Write to Jacob Sonenshine at [email protected]
