Wall Street ended sharply higher on Tuesday, as Microsoft and Apple spearheaded a strong rebound in growth stocks and investors awaited monthly payrolls data later this week that could influence the U.S. Federal Reserve’s decision on when to scale back monetary stimulus. The TSX also rose, with energy stocks among those seeing the biggest lift as oil prices advanced to fresh multi-year highs.
Apple, Microsoft, Amazon and Alphabet, Wall Street’s most valuable companies, each rose following a selloff in growth stocks the day before.
Facebook Inc rebounded a day after taking a beating when its app and its photo-sharing platform Instagram went offline for hours.
Almost all of the 11 major S&P 500 sector indexes rose, with financials, communication services and technology among the top performers.
The S&P 500 logged its fourth straight day of 1% moves in either direction. The last time the index saw that much volatility was in November 2020, when it rose or fell 1% or more for seven straight sessions.
“We’re buying the dip, but the dip isn’t 10% anymore. The dip is now 2%, or 4%,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma. “People are trained like Pavlov’s dog to buy the dip, which is reinforcing all of this.” Technology stocks and other high-growth stocks took a beating on Monday as U.S. Treasury yields ticked higher amid concerns about a potential U.S. government debt default.
The Senate will vote on Wednesday on a Democratic-backed measure to suspend the U.S. debt ceiling, a key lawmaker said on Tuesday, as partisan brinkmanship in Congress risks an economically crippling federal credit default.
Investors will watch September employment data on Friday for hints about the tapering of the U.S. Federal Reserve’s asset purchase program.
Adding to concerns the Fed could tighten monetary policy sooner than expected, recent data showed increased consumer spending, accelerated factory activity and elevated inflation.
Data from the Institute for Supply Management showed its U.S. non-manufacturing activity index edged up to a reading of 61.9 last month from 61.7 in August.
According to preliminary data, the S&P 500 gained 45.23 points, or 1.05%, to end at 4,345.69 points, while the Nasdaq Composite gained 178.35 points, or 1.25%, to 14,433.83. The Dow Jones Industrial Average rose 315.57 points, or 0.93%, to 34,318.49.
The S&P 500 is down more than 3% from its record high close on Sept. 2. However, about half of the index’s components have fallen 10% or more from their own 52-week highs.
Canada’s main stock index rose on Tuesday as a seven-year high for oil prices bolstered energy shares and bank stocks benefited from a steeper yield curve, with the index recovering from a two-and-half-month low the day before.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 131.18 points, or 0.7%, at 20,183.43. On Monday, it posted its lowest closing level since July 20.
“Energy stocks are helping to drive the index today,” said Lorne Steinberg, president, Lorne Steinberg Wealth Management Inc.
The energy group climbed 2.8% as oil rose to its highest level since 2014, supported by the OPEC+ decision on Monday to stick to planned output rises. U.S. crude prices settled 1.7% higher at $78.93 a barrel.
Consumer discretionary stocks added 1%, while financials, which account for about 30% of the Toronto market’s capitalization, were up 0.9%.
“We remain very bullish on banks,” Steinberg said. “They still seem to be a pretty cheap, attractive sector in the market and a huge beneficiary of a steeper yield curve.”
A steeper yield curve, or a wider gap between long-term and short-term rates, helps improve the profit margins of banks.
The gap between the Canadian 2- and 10-year yields widened by 4.1 basis points to 100 basis points in favor of the longer-term bond, the widest gap since June.
Worries around higher inflation and a slowdown in economic growth have rattled investor sentiment in recent weeks. Still, the Toronto market has gained nearly 16% since the start of the year.
Gains for the TSX on Tuesday came as data showed Canada’s trade surplus with the world widening in August to C$1.9 billion.
Canada’s employment report for September is due on Friday, which could offer clues on the Bank of Canada policy outlook.
Read more: Stocks that saw action on Tuesday - and why
Reuters, Globe staff
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.