Major Wall Street indices rebounded on Tuesday as investors raised shares of megacap growth and energy companies last week on concerns of a global economic slowdown.
The Dow climbed 641.47 points, or 2.2%, while the Nasdaq climbed 270.95 points, or 2.5%.
The S&P 500 was up 89 points, or 2.5%. All 11 major S&P 500 sectors edged up as stocks fell broadly last week after the benchmark index posted its biggest weekly percentage decline since March 2020.
With investors trying to assess how far the stock could fall as they weigh the risks to the economy, the Federal Reserve has taken aggressive measures to try to cushion rising inflation. The S&P 500 is down more than 20% this year after confirming it was in a bear market earlier this month.
“Do I think we’ve hit a bottom? No. I think we’re going to see more volatility, I think the down process may take some time,” said Christina Hooper, chief global markets strategist at Invesco Told. “But I think it’s a good sign to see investor interest.”
The energy sector, the S&P 500 sector that was the biggest gainer this year, rose more than 5% after falling last week.
Megacap stocks Apple, Tesla and Microsoft all rose solidly to give the S&P 500 the biggest individual boost ever.
The Fed last week approved its biggest interest rate hike in more than a quarter of a century to curb inflationary gains.
Investors are turning to the testimony of Fed Chair Jerome Powell of the Senate Banking Committee on Wednesday for clues to future interest rate hikes and his latest thoughts on the economy.
Goldman Sachs now expects the US economy to have a 30% chance of going into recession next year, up from its previous forecast of 15%.
In company news, Kellogg’s shares rose 2% after the breakfast cereal maker said it was splitting into three companies.
Spirit Airlines shares jumped 8% after JetBlue Airways said it sweetened its bid to persuade the ultra-low cost carrier to accept its offer on rival Frontier Airlines’ offer.