Nvidia, DaVita drive S&P 500 gains that covered steep losses from yesterday
U.S. stocks rose on Wednesday to recover much of their sharp losses from a day before, triggered by worries that high interest rates may stick around for months longer than hoped.
The S&P 500 climbed 47.45 points, or 1%, to 5,000.62 and clawed back more than two-thirds of its loss from Tuesday. A hotter-than-expected report on inflation forced investors to delay forecasts for when the Federal Reserve may begin cutting interest rates, potentially into the summer. Expectations for such cuts are a big reason stocks rallied to records recently.
The Dow Jones Industrial Average gained 151.52 points, or 0.4%, to 38,424.27 a day after after dropping 524 points for its worst loss in nearly 11 months. The Nasdaq composite jumped 203.55, or 1.3%, to 15,859.15.
The smallest stocks, which took the hardest hit from worries about higher interest rates on Tuesday, bounced back more than the rest of the market. The Russell 2000 index leaped 2.4%.
Helping to keep things steadier on Wall Street was a calmer bond market. Treasury yields eased after shooting upward a day earlier on expectations the Fed would keep rates high for longer. The central bank has already jacked its main interest rate to the highest level since 2001 in hopes of slowing the overall economy just enough to grind high inflation down to its target.
The yield on the 10-year Treasury fell to 4.25% from 4.32% late Tuesday. It’s still well above its 3.85% level at the start of this month.
Critics have been arguing that stock prices may have run too far, too fast in their rally since October. A pullback could be healthy if it take some of the “froth” out of the market, according to JJ Kinahan, CEO of IG North America.
Kinahan said he found it interesting that big recent winners like Nvidia and other chipmakers finished Tuesday well off their lows for the day. That makes him think the day’s drop “was more about taking some profits than it was panic selling” by investors.
Nvidia, which has been riding a mania around artificial-intelligence technology, rose 2.5% Wednesday and was the single strongest force pushing up the S&P 500 index.
DaVita jumped 8.6% for one of the S&P 500’s larger gains after the health care company reported stronger profit and revenue for the latest quarter than analysts expected.
Most companies in the S&P 500 have been topping analysts’ forecasts for the last three months of 2023. Hopes for stronger growth in 2024 from a solid economy have been another reason the S&P 500 has set 10 records already this year.
Lyft shares leaped 35.1% after a wild ride in off-hours trading driven in part by a typo in its latest earnings report. The ride-hailing company reported stronger results than analysts expected, but its press release also said it expects a key measure of profitability to improve by 500 basis points, or 5 percentage points. Later, it said that should have been 50 basis points, or 0.5 percentage points.
Lyft’s stock rocketed by more than 60% in after-hours trading Tuesday following the typo.
Rival Uber Technologies rose 14.7% after its board authorized a program to buy back up to $7 billion of its stock. Investors tend to like such programs because they send cash directly to shareholders and can boost per-share profits.
Robinhood Markets gained 13% after it reported a profit for the latest quarter, when analysts were expecting a loss. The stock and crypto trading platform also said its total net revenue rose 24%, more than analysts expected.
On the losing end, Akamai Technologies dropped 8.2% after it reported mixed results. Its profit for the latest quarter topped analysts’ forecasts, but its revenue fell short.
Online vacation rental booker Airbnb slipped 1.7% after it reported losing $349 million in the fourth quarter due to an income tax settlement with Italy. Analysts had been expecting a profit.
The company forecast first-quarter revenue that would meet or beat Wall Street expectations, however, Airbnb said the pace of bookings growth is likely to “moderate” from the fourth quarter into the first.
In stock markets abroad, London’s FTSE 100 rose 0.7% following a better-than-expected report on inflation in the United Kingdom.
Hong Kong’s Hang Seng index gained 0.8% after trading reopened there, but markets remained closed in mainland China for the Lunar New Year holiday. Stocks fell elsewhere in Asia, with Japan’s Nikkei 225 down 0.7% and South Korea’s Kospi down 1.1%.
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AP Business Writers Yuri Kageyama and Matt Ott contributed.
