Wall Street’s main indexes rallied strongly on Tuesday, with the Nasdaq surging 3% as investors piled onto beaten-down quality technology stocks, while Intel jumped after plans to take its self-driving car unit public.
The chip giant’s decision to list Mobileye in the United States in mid-2022 was met overwhelmingly, with its shares 4.5% higher. The Philadelphia SE Semiconductor index surged 5.0%, bouncing off a near one-month low hit in the previous session.
All of the 11 major S&P sectors advanced, with the information technology sector, which houses companies like Visa Inc, Mastercard Inc, Salesforce.com, Apple Inc and Microsoft Corp, gaining 3.4%.
The Nasdaq has climbed nearly 4% so far this week, more than recovering all its losses suffered last week when the Federal Reserve’s hawkish comments about speedier taper spurred bets about an early interest rate hike next year to curb surging inflation.
“The markets understand that a zero interest rate environment is not going to last forever, that the Fed is going to use a measured approach to raising rates and not just some dramatic balance upwards,” said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh.
“This is a reflection of what is driving the market. Things that were on sale are being bought, especially those higher multiple stocks.” Optimistic comments from a top U.S. official about the nature of the Omicron variant and positive data on a COVID-19 drug’s efficacy against the latest variant also boosted investors’ sentiment.
Shares of Vir Biotechnology jumped 4.8% after British drugmaker GSK said an antibody-based COVID-19 therapy it is developing with Vir is effective against all mutations of the Omicron variant.”It (Omicron) doesn’t seem as devastating as prior variants and I think all of this is making us move out of the financial doldrums of COVID,” Forrest said.
The CBOE volatility index, too, eased from a 10-month high hit last week. At 12:07 p.m. ET, the Dow Jones Industrial Average was up 537.15 points, or 1.52%, at 35,764.18, the S&P 500 was up 96.81 points, or 2.11%, at 4,688.48, and the Nasdaq Composite was up 459.76 points, or 3.02%, at 15,684.91.
Shares of mega-cap tech stocks Meta Platforms, Google-owner Alphabet, Tesla Inc and Amazon added between 2.0% and 3.1%. Travel shares continued the momentum, with the S&P 1500 Airlines and the S&P 1500 Hotels, Restaurant and Leisure indexes rising 0.6% and 2.0%, respectively.
American Airlines added 1.1% after the carrier announced the retirement of Chief Executive Officer Doug Parker. Merck & Co fell 1.9% as Guggenheim downgraded the stock to “neutral” from “buy” after the drugmaker paused enrollment in two late-stage clinical trials testing its experimental drug for treatment and prevention of HIV-1.
Advancing issues outnumbered decliners by a 7.13-to-1 ratio on the NYSE and by a 4.70-to-1 ratio on the Nasdaq. The S&P index recorded 34 new 52-week highs and no new low, while the Nasdaq recorded 40 new highs and 36 new lows.