U.S. stocks rose on Tuesday as the market rebounded from a punishing bear market for the tech-heavy Nasdaq and a sharp pullback in the S&P 500 gained momentum.
The Dow Jones Industrial Average jumped 431.23 points, or 1.34%, to 32,654.65. The S&P 500 gained 2.02% to 4,088.92. The Nasdaq Composite added 2.76% to 11,984.52.
The gains marked the market’s latest attempt to rally after weeks of steep losses. The S&P 500 is coming off a six-week losing streak – its longest since 2011. The Dow, meanwhile, has fallen for seven straight weeks, marking its longest weekly decline since 2001. Year-to-date , the S&P 500 and the Dow are down 14.2% and 10.1%, respectively.
“Our contributions today support the kind of momentum we saw on Friday and a continuation of that,” said Art Hogan, chief market strategist at National Securities. “But the most important thing for investors is that you get to a point where you’ve factored in a lot of worst-case scenarios.”
Shares of Citigroup and Paramount Global jumped on Tuesday after Berkshire Hathaway disclosed its stakes in the two companies. Citigroup jumped 7.6% after Warren Buffett’s conglomerate revealed it added a nearly $3 billion stake in the troubled bank during the first quarter.
Citi shares have underperformed the rest of the financial sector over the past 12 months, down 34.1%, while the Financial Select Sector SPDR fund is down 8.8% over the same period.
Meanwhile, shares of Paramount Global also jumped 15.4% after Berkshire acquired a $2.6 billion stake in the company at the end of March.
Elsewhere, semiconductor stocks rose. Shares of Advanced Micro Devices jumped more than 8% following an upgrade from Piper Sandler, who said the stock looked attractive after falling 34.5% this year. Nvidia’s stock price rose 5%, Qualcomm’s 4% and Micron Technology’s almost 6%.
Travel stocks rose after United Airlines raised its second-quarter revenue outlook on improving consumer demand. United Airlines’ stock price rose 8%, Delta’s rose 6.6% and American Airlines’ stock rose 7%.
On the economic front, retail sales figures were roughly in line with expectations. Consumer spending in retail rose 0.9% in April, according to the US Census Bureau. Retail sales excluding automobiles rose 0.6% in April.
Meanwhile, earnings reports from major consumer companies Home Depot and Walmart seemed to convey differing stories about consumers’ resilience to inflation.
Home Depot shares climbed 2.6% after better-than-expected quarterly results. The home improvement retailer also raised its full-year outlook. In a Tuesday note, analysts at Jefferies called the company a “beneficiary of a healthy consumer” engaged in home improvement projects.
Meanwhile, Walmart shares fell 11% after the retail giant reported a loss in profit due to higher prices. The company raised its sales outlook, but lowered its profit forecast.
On Tuesday afternoon, stocks retreated slightly from their session highs, then rebounded slightly as investors absorbed the latest comments on inflation from Federal Reserve Chairman Jerome Powell at a conference. from the Wall Street Journal.
“If it means going beyond widely understood levels of neutrality, we won’t hesitate to do so,” Powell said. “We will go until we feel we are at a place where we can say financial conditions are in an appropriate place, we see inflation coming down. We will go to that point. There will be no hesitation on this subject.
Some market participants wondered if stocks could sustain gains, fearing the economy could eventually tip into a recession. They urged investors to be wary of rallies:
“Despite Friday’s strong rally, our bearish base case remains firmly intact,” Chris Senyek, chief investment strategist at Wolfe Research, wrote in a Tuesday note. “We would use rips to position ourselves more defensively.”
Others thought any upside would be short-lived:
“Looking at some historical parallels, this rebound could last a week or two and still run a few percent (although everything seems to be happening much faster these days due to the speed of technology, the flow of information and market access),” Susquehanna’s Chris Murphy wrote in a Tuesday note.
Sarah Min contributed reporting.