Wall Street bounces as tech rout halts
(Reuters) – Wall Street’s main indexes jumped on Wednesday as investors took advantage of a three-day sell-off to buy cheaper technology-related stocks, a day after the Nasdaq confirmed correction territory.
Tesla Inc shares jumped 6.9% after losing about a fifth of their value in the previous session, while Apple Inc, Microsoft Corp and Amazon.com Inc – the top three U.S. public companies by market capitalization – rose between 4.6% and 5.3%.
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.
“Today is definitely a relief switch, but I don’t think the markets are turning the page on some concerns that those companies have gone too far too fast,” said Keith Buchanan, portfolio manager at GLOBALT Investments in Atlanta, Georgia.
U.S. stocks have become susceptible to wild swings in 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 earlier this year.
The recent pullback has also been driven by worries that sellers of call options would unwind massive amounts of stocks that they bought as hedges during the rally.
Media reports said last week SoftBank Group Corp has made big bets on equity derivatives tied to tech firms.
In signs of growing unease about the positioning in tech stocks, skews, a measure of demand for protective put options in relation to call options, have 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 the most choppy two months of the year.
At 1:06 p.m. ET, the Dow Jones Industrial Average was up 598.79 points, or 2.18%, at 28,099.68, and the S&P 500 was up 85.02 points, or 2.55%, at 3,416.86.
The Nasdaq Composite was up 351.70 points, or 3.24%, at 11,199.39, and was on course for its best day since April 14.
Growth-linked stocks jumped 3.3% after lagging value stocks such as banks for three straight sessions.
Market participants warned signs of a pickup in business activity were not yet strong enough to support a wider market rotation.
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 1.1%.
Tiffany & Co tumbled 6.6% after French luxury goods giant LVMH warned it was set to walk away from its planned $16 billion takeover of the U.S. jeweler.
Advancing issues outnumbered decliners more than 2-to-1 on the NYSE and on the Nasdaq.
The S&P index recorded two new 52-week highs and two new lows, while the Nasdaq recorded 29 new highs and 15 new lows.
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