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Wall Street saw mixed trading on Tuesday, led by a late-session rally of mega-cap tech stocks. Although there have been apprehensions about further interest rate hikes by the Fed, President Biden’s announcement that the government would be looking to eliminate Trump-era tariffs on China to address inflation lifted investor mood. Treasury yields tumbled. Two of the three major indexes managed to end in the green, while one ended in the red.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.3% or 84.96 points to close at 32,160.74. Fifteen components of the 30-stock index ended in the red, one remained unchanged, while 14 ended in the green.
The tech-heavy Nasdaq Composite gained 1% or 114.42 points to close at 11,737.67, led by a tech-stock rally.
The S&P 500 rose 0.3% or 9.81 points to end at 4,001.05. However, seven of the 11 broad sectors of the benchmark index closed in the red.
The Real Estate Select Sector SPDR (XLRE), the Utilities Select Sector SPDR (XLU), and the Financials Select Sector SPDR (XLF) lost 2.2%, 1.2% and 0.9%, respectively, while the Technology Select Sector SPDR (XLK) rose 1.5%.
The fear-gauge CBOE Volatility Index (VIX) decreased 5.1% to 32.99. A total of 15.5 billion shares were traded on Tuesday, higher than the last 20-session average of 12.6 billion. Decliners outnumbered advancers on the NYSE by a 1.36-to-1 ratio. On the Nasdaq, a 1.34-to-1 ratio favored declining issues.
Biden’s Announcement Leads to Late-session Rally
Lately, stock sell-off on Wall Street has come in direct response to the Fed’s plans to increase interest rates to rein in inflation. Investors have remained unconvinced that the 50 basis point hike announced last Wednesday would sufficiently deal with the situation and expect further rate hikes. There have been concerns about a 75 basis point hike in the June meeting. These measures can slow down the economy and usher in a recession. Tuesday was no different, with the markets making early losses until President Biden, in his speech, addressed inflation by announcing that the government was looking to lift the tariffs on Chinese products and services imposed by the previous administration.
This, alongside expectations that inflation might be peaking, induced a late-session rally in tech stocks as many mega-cap tech giants have major manufacturing units in China. Technology and growth stocks, whose valuations depend heavily on future cash flows, have been among the hardest hit in recent times.
U.S. Treasuries Rally As Investors Flock to The Bond Market
Another factor that drove markets on Tuesday was government bonds, which rallied, bringing the yields down, as investors re-assessed inflation risks just ahead of Wednesday’s CPI data. The 10-year and 30-year bond yields dropped 9 and 8 basis points, respectively. Buyers flocked to the bond market as worries over stagflation dominated proceedings.
Global Issues Remain Disruptive
Oil prices went down, keeping concerns about energy demand alive, as China, one of the top oil importers in the world, remains in lockdown. U.S. crude fell 3.41% to $99.57/barrel and Brent was at $102.30, down 3.44% on the day. The war in Ukraine kept investors worried as supply-chain disruptions are continuing to impact the fuel and commodity market.
No economic data was released on Tuesday.
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Stock Market News for May 11, 2022
Wall Street saw mixed trading on Tuesday, led by a late-session rally of mega-cap tech stocks. Although there have been apprehensions about further interest rate hikes by the Fed, President Biden’s announcement that the government would be looking to eliminate Trump-era tariffs on China to address inflation lifted investor mood. Treasury yields tumbled. Two of the three major indexes managed to end in the green, while one ended in the red.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.3% or 84.96 points to close at 32,160.74. Fifteen components of the 30-stock index ended in the red, one remained unchanged, while 14 ended in the green.
The tech-heavy Nasdaq Composite gained 1% or 114.42 points to close at 11,737.67, led by a tech-stock rally.
The S&P 500 rose 0.3% or 9.81 points to end at 4,001.05. However, seven of the 11 broad sectors of the benchmark index closed in the red.
The Real Estate Select Sector SPDR (XLRE), the Utilities Select Sector SPDR (XLU), and the Financials Select Sector SPDR (XLF) lost 2.2%, 1.2% and 0.9%, respectively, while the Technology Select Sector SPDR (XLK) rose 1.5%.
The fear-gauge CBOE Volatility Index (VIX) decreased 5.1% to 32.99. A total of 15.5 billion shares were traded on Tuesday, higher than the last 20-session average of 12.6 billion. Decliners outnumbered advancers on the NYSE by a 1.36-to-1 ratio. On the Nasdaq, a 1.34-to-1 ratio favored declining issues.
Biden’s Announcement Leads to Late-session Rally
Lately, stock sell-off on Wall Street has come in direct response to the Fed’s plans to increase interest rates to rein in inflation. Investors have remained unconvinced that the 50 basis point hike announced last Wednesday would sufficiently deal with the situation and expect further rate hikes. There have been concerns about a 75 basis point hike in the June meeting. These measures can slow down the economy and usher in a recession. Tuesday was no different, with the markets making early losses until President Biden, in his speech, addressed inflation by announcing that the government was looking to lift the tariffs on Chinese products and services imposed by the previous administration.
This, alongside expectations that inflation might be peaking, induced a late-session rally in tech stocks as many mega-cap tech giants have major manufacturing units in China. Technology and growth stocks, whose valuations depend heavily on future cash flows, have been among the hardest hit in recent times.
This saw stocks like Microsoft Corporation (MSFT - Free Report) and Apple Inc. (AAPL - Free Report) rise to end the day higher by 1.9% and 1.6%, respectively. Apple carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
U.S. Treasuries Rally As Investors Flock to The Bond Market
Another factor that drove markets on Tuesday was government bonds, which rallied, bringing the yields down, as investors re-assessed inflation risks just ahead of Wednesday’s CPI data. The 10-year and 30-year bond yields dropped 9 and 8 basis points, respectively. Buyers flocked to the bond market as worries over stagflation dominated proceedings.
Global Issues Remain Disruptive
Oil prices went down, keeping concerns about energy demand alive, as China, one of the top oil importers in the world, remains in lockdown. U.S. crude fell 3.41% to $99.57/barrel and Brent was at $102.30, down 3.44% on the day. The war in Ukraine kept investors worried as supply-chain disruptions are continuing to impact the fuel and commodity market.
No economic data was released on Tuesday.