By Christine Idzelis and William Watts
U.S. stocks ended mostly higher Tuesday after a choppy day of trading that saw the technology sector under pressure, with the Dow Jones Industrial Average and S&P 500 closing with gains while the tech-heavy Nasdaq Composite index fell.
Energy shares rallied, however, as oil prices bounced despite the White House announcing the U.S. would release crude from its Strategic Petroleum Reserve in a coordinated move with other countries to try to lower the cost of gasoline.
How did stock indexes trade?
The Dow Jones Industrial Average DJIA rose 194.55 points, or 0.6%, to close at 35,813.80.
The S&P 500 /zigman2/quotes/210599714/realtime SPX -1.72% advanced 7.76 points, or 0.2%, to end at 4,690.70.
The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -1.80% slid 79.62 points, or 0.5%, to finish at 15,775.14.
On Monday , the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.62% rose less than 0.1% to end at 35,619.25. The S&P 500 /zigman2/quotes/210599714/realtime SPX -1.72% fell 0.3% after hitting an intraday all-time high at 4,743.83 earlier in the session. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP -1.80% fell 1.3% to 15,854.76 for its biggest decline since Nov. 10.
What drove the market?
U.S. technology stocks extended their slide from the previous session as Treasury rates continued their climb.
The market may be pricing in a rise in interest rates beginning in the middle of next year, which is “not positive for long-duration assets like technology” stocks, said Wayne Wicker, chief investment officer at MissionSquare Retirement, in a phone interview Tuesday.
Monday’s late-day weakness in the stock market was tied by some analysts to expectations that Federal Reserve Chairman Jerome Powell — nominated to a second term by President Joe Biden earlier the same day — could tighten monetary policy faster than Lael Brainard, who was appointed Vice Chair but had also been in the running for the top job.
“Ultimately I don’t see how the Powell-led Fed is more hawkish today than it was last week, but we should always beware linear thinking: even the Fed can adapt and learn from the persistently high inflation,” said Neil Wilson, chief market analyst for Markets.com, in a note to clients.
“You never know, perhaps the Fed — and the White House — are starting to heed some warnings about what untethered inflation can do. In summary, you could say there has been a whiff of a hawkish tilt at the Fed in recent weeks and the administration is OK with that,” said Wilson.
The yield on the 10-year Treasury note /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +2.23% rose 4 basis points Tuesday to 1.665%, after on Monday seeing its largest daily gain since November 10, according to Dow Jones Market Data.
Investors also were watching yet another resurgence of new coronavirus cases in Europe and Asia in particular , which have prompted another round of restrictions on businesses and consumers to try to limit infections.
Lockdowns can be “detrimental” to economic growth, said Wicker. “I can’t imagine that we’ll revert to that,” in the U.S., he said, “especially with booster shots coming into play.”