NEW YORK (Reuters) – Wall Street’s main indexes ended higher on Wednesday to snap a three-session losing skid as investors jumped back in to take advantage of the pullback in technology-related stocks, a day after the Nasdaq confirmed correction territory.
Tesla Inc shares rebounded after suffering their biggest one-day percentage drop in the prior session, while Apple Inc, Microsoft Corp and Amazon.com Inc – the top three U.S. public companies by market capitalization – each rose by at least 3%.
Other stay-at-home winners such as Facebook Inc and Google-parent Alphabet Inc also climbed, a day after the tech-heavy Nasdaq ended 10% below its Sept. 2 record closing high, commonly known as a correction. The S&P tech sector notched its biggest one-day percentage gain since April.
“It’s certainly a massive, surprising rebound,” said Jack Ablin, chief investment officer at Cresset Capital Management in Chicago.
“On one level it looks speculative but on another it is almost defensive because we know these companies will survive no matter what COVID throws at us.”
Analysts also said the Nasdaq’s ability to hold its 50-day moving average, a technical support level, was key in reversing the market’s direction.
Unofficially the Dow Jones Industrial Average rose 439.78 points, or 1.6%, to 27,940.67, the S&P 500 gained 67.22 points, or 2.02%, to 3,399.06 and the Nasdaq Composite added 293.87 points, or 2.71%, to 11,141.56.
U.S. stocks have become susceptible to volatility as market leadership has narrowed during the year to a handful of heavyweight tech-related stocks as traders bid up their shares in a rally that triggered a Nasdaq-led rebound for Wall Street from its pandemic lows in March.
For a graphic on The taller they grow … The taller they grow …: here
The recent pullback has also been driven by worries that sellers of call options would unwind massive amounts of stocks they bought as hedges during the rally.
FILE PHOTO: The Wall Street sign is pictured at the New York Stock exchange (NYSE) in the Manhattan borough of New York City, New York, U.S., March 9, 2020. REUTERS/Carlo Allegri/File Photo
Media reports last week said SoftBank Group Corp has made big bets on equity derivatives tied to tech firms.
In a sign of growing unease about the positioning in tech stocks, skew, a measure of demand for protective put options in relation to call options, has risen sharply.
Market volatility is expected to further increase in the run-up to the U.S. presidential election, with September and October also historically turbulent months of the year.
In a reversal from the prior three sessions, growth stocks jumped to outperform the climb in value stocks on the day.
Market participants were watching for signs of a widening in market breadth, supported by improving economic data.
FILE PHOTO: The front facade of the New York Stock Exchange (NYSE) is seen in New York City, New York, U.S., June 26, 2020. REUTERS/Brendan McDermid
AstraZeneca Plc could resume trials for its experimental coronavirus vaccine next week, the Financial Times reported, after the British drugmaker paused global trials of its experimental COVID-19 vaccine. Still, its U.S.-listed shares fell.
Tiffany & Co tumbled after French luxury goods giant LVMH warned it was set to walk away from its planned $16 billion takeover of the U.S. jeweler.
Reporting by Chuck Mikolajczak in New York; Editing by Matthew Lewis
Stocks opened to record highs on Wednesday as the major averages look to keep the momentum going after a strong start to September.
The Dow Jones Industrial Average gained 122 points, or 0.43%, in the opening minutes of trading, after climbing into positive territory for the year on Tuesday.
Meanwhile, the S&P 500 and the Nasdaq Composite were higher by 0.4% and 0.8%, respectively, adding to their record closes from the previous session. The S&P 500 has booked 21 record-high closes this year while the Nasdaq has finished at an all-time high 42 times.
Looking at the economy, the ADP employment report showed private payrolls grew by 428,000 workers in August, missing the 950,000 that analysts surveyed by Refinitiv were expecting. The Labor Department will release the August jobs report ahead of Friday’s opening bell.
Looking at stocks, Macy’s Inc. lost $431 million in the three months through June amid a faster-than-expected recovery of in-store sales and continued strength from its e-e-commerce business. The department store chain posted a $3.58 billion loss during the previous quarter.
DraftKings Inc. named NBA Hall of Famer Michael Jordan as a special adviser to the board of directors. Jordan will take an equity stake in the company in exchange for his guidance and strategic advice.
The Chinese coffee chain has fallen under strict regulatory scrutiny in recent weeks after its April 2 discovery that employees including its chief operating officer fabricated as much as 2.2 billion yuan ($310 million) in sales. The falsifications occurred from the second quarter of 2019 to the fourth quarter, Luckin said.
The exchange’s staff cited “public interest concerns” surrounding the cooked books, as well as past failure to disclose critical information, for its delisting recommendation. Advertisement
Luckin aims to request a hearing before an exchange panel and will remain listed on Nasdaq pending the hearing’s outcome, according to the filing. Hearings typically take place 30 to 45 days after a request is made.
The Luckin filing comes nearly one week after President Donald Trump said the US is “looking at” Chinese firms that trade on US exchanges but don’t follow accounting guidelines. The president added that such policy could backfire and drive Chinese companies to go public in London or Hong Kong.
The Wall Street Journal reported on April 29 that the Securities and Exchange Commission is investigating the coffee chain over its sales fabrications. The probe will serve as a litmus test for how the agency will cooperate with Chinese regulators, as the country recently introduced new laws that limit compliance with overseas authorities.
Luckin stock surged as high as $5o in January before plummeting through the coronavirus sell-off. The company made its US trading debut in May 2019.Advertisement
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