Stocks rebounded Tuesday, recovering some of the steep losses of the prior trading session that sent both the Dow Jones Industrial Average and the S&P 500 down more than 2 percent.
The S&P 500 climbed 1 percent after falling to a new closing low and touching a new intraday low for 2018 on Monday. The Dow Jones Industrial Average rallied more than 280 points, led higher by gains in Boeing and Johnson & Johnson.
The Nasdaq Composite rose 0.8 percent as Amazon, Apple and Google-parent Alphabet all traded higher.
The S&P 500 fell 2 percent on Monday to 2,545.94 — its lowest close for 2018. The Dow Jones Industrial Average plunged 507.53 points — or 2.1 percent — to close at 23,592.98, ratcheting up a combined two-day loss of more than 1,000 points.
“We’ve certainly gone low enough that markets could find some stability here,” said Bruce McCain, chief investment strategist at Key Private Bank. “I think it’s anxiety about slowing economic growth and [traders] want assurance that someone’s going to do something.”
The Dow and S&P 500, which are both in corrections, are on track for their worst December performance since the Great Depression in 1931, down more than 7 percent so far for the month. The S&P 500 is now in the red for 2018 by 4 percent.
The Nasdaq Composite saw declines, falling 2.27 percent to end the trading day at 6,753.73. The Russell 2000 — which tracks the performance of smaller companies — entered a bear market Monday, down 20 percent from its 52-week high.
The Cboe Volatility Index — one of Wall Street’s gauges of market fear — rose above 25 and volume for the stock market was heavier than usual.
“Clearly, it’s a time of uncertainly both here and overseas, but given the strength of the economy, it’s going to take some time until the economic backdrop supports a bear market,” McCain added. “It’s about managing your anxiety and waiting long enough to find out that, hopefully, the news isn’t so bad.”
A slew of stocks were on pace for notable comebacks on Tuesday following losses on Monday.
E-commerce giant Amazon — which sank nearly 4.5 percent on Monday — rallied 1 percent. Aircraft and aerospace manufacturer Boeing jumped 3.7 percent after hiking its dividend by 20 percent, and chipmakers Nvidia and Advanced Micro Devices gained 1.8 percent and 3 percent, respectively.
The Federal Reserve is widely expected to hike its benchmark overnight lending rate for a fourth and final time of 2018 when it concludes a two-day policy meeting on Wednesday. While fears of rising interest rates have spooked markets throughout the year, such concerns have heightened over the past month as inflation and growth expectations recede.
While market participants see the odds of a December rate hike above 70 percent, investors will likely scrutinize — and react to — the Fed’s outlook for 2019. Rising interest rates can be a hurdle to smaller companies that carry a high proportion of debt, so any sign that the Fed plans to continue to raise rates each quarter could weigh on corporate sentiment. The interest on loans businesses pay increases as interest rates rise.
U.S. President Donald Trump took aim at the Fed again on Tuesday, urging central bank members to not “let the market become any more illiquid than it already is.”
“Feel the market,” Trump encouraged, “don’t just go by meaningless numbers. Good luck!”
Trump’s tweet Tuesday follows his criticism of the Fed on Monday, when he said “it is incredible” that the central bank is “even considering yet another interest rate hike” amid the “outside world blowing up around us.” Trump has openly criticized the Fed as well as Fed Chairman Jerome Powell several times in 2018.
— CNBC’s
Michael Sheetz
and
Eustance Huang
contributed to this report.
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