By DAMIAN J. TROISE and ALEX VEIGA
AP Business Writers
Stocks closed higher on Wall Street Tuesday as technology companies rebounded after an early loss. The S&P 500 rose 0.9%. The index is coming off five straight losses and hadn’t closed higher since the very first trading day of the year. The Dow Jones Industrial Average rose 0.5% and the Nasdaq rose 1.4%. The yield on the 10-year Treasury note fell to 1.74%. Bond yields have risen sharply since the beginning of the year. Investors are anticipating that interest rates will rise in the coming months as the Federal Reserve shifts from stimulating the economy to fighting inflation.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
Stocks shed an early loss and rose in afternoon trading on Wall Street Tuesday as technology stocks reversed course and turned higher.
The S&P 500 rose 0.9% as of 3:16 p.m. Eastern. The benchmark index is coming off of five straight losses and hasn’t had a winning day since the first trading day of the year, when it set an all-time high.
The Dow Jones Industrial Average rose 185 points, or 0.5%, to 36,255 and the tech-heavy Nasdaq rose 1.4%.
Traders are trying to calibrate how markets and the economy will handle the higher interest rates that are likely on the way from the Federal Reserve this year. That has weighed heaviest on pricey technology stocks, which become less attractive to investors as interest rates rise.
Technology stocks have been choppy since late Monday, when a late-afternoon rally for the sector trimmed much of the broader market’s losses. Apple rose 1.5% and chipmaker Nvidia rose 1.5%.
Retailers and other companies that rely on direct consumer spending also gained ground. Las Vegas Sands jumped 7.5% and Gap rose 3.2%.
Energy futures rose. The price of U.S. crude oil jumped 3.8%, helping boost energy stocks. Exxon Mobil rose 3.9%.
Bond yields were mostly stable, though they have risen sharply since the beginning of the year. The yield on the 10-year Treasury fell to 1.75% from 1.77% late Monday.
Utilities and other investments that are considered less risky fell.
The Fed has said it will accelerate the reduction of its bond purchases, which have helped keep interest rates low. The market now puts the chances of the Fed raising short-term rates by at least a quarter point in March at around 78%. A month ago, it was about 36%.
The central bank is easing up on its support for the U.S. economy and financial markets as businesses and consumers face persistently rising inflation.
Fed Chair Jerome Powell acknowledged Tuesday that high inflation has emerged as a serious threat to the Fed’s goal of helping put more Americans back to work and that the Fed will raise rates more than it now plans if needed to stem surging prices. Powell spoke at a hearing of the Senate Banking Committee, which is considering his nomination for a second four-year term.
The World Bank downgraded its forecast for the global economy, partly blaming supply chain problems that have been fueling inflation. The 189-country, anti-poverty agency forecasts worldwide economic growth of 4.1% this year, down from the 4.3% growth it was forecasting last June. It’s also down from the 5.5% expansion it estimates the global economy tallied in 2021.
Investors will get two key reports on inflation this week from the Labor Department. The consumer price index for December will be released on Wednesday and give update on how inflation is driving the price of goods for consumers. An index based on U.S. wholesale prices in December will be released on Thursday and provide another update on how inflation is affecting costs for businesses.
Wall Street is also watching rising numbers of coronavirus cases globally to gauge the economic impact. China, the world’s second-largest economy, has put a third city on lockdown because of the latest surge.
Major companies, including automakers such as Toyota, had been counting on a recovery in the supply of semiconductor chips and other products from China and the rest of Asia, as vaccinations and other coronavirus prevention efforts has advanced. The recent surge in infections by the omicron variant of coronavirus has shaken such hopes.
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