U.S. stocks rose again on Tuesday as Wall Street appeared to find its footing after a rocky start to the new year.
The tech-heavy Nasdaq Composite gained 1.4%, building on an afternoon rally from the previous session that snapped a four-day losing streak. The S&P 500 rose 0.9%, while the Dow Jones Industrial Average added 183 points, or 0.5%.
Stocks have been volatile to start the year, as rising interest rates have put pressure on equities. However, interest rates cooled on Tuesday, with the 10-year Treasury yield slipping below 1.75%.
“More than anything, it’s just a reprieve from some pretty extreme selling we’ve had over the past number of weeks, really since the beginning of the year,” said Jeff Mills, chief investment officer at Bryn Mawr Trust Wealth Management.
“I think it’s probably premature to call this some sort of a bottom in tech. I think you’re just getting at least one day of reprieve given the move in rates,” Mills added.
Large tech stocks helped support the broader market, with Amazon rising 2.4% and shares of Apple and Nvidia gaining roughly 1.7% and 1.5%, respectively. Other notable gainers included Illumina, which rose 17% after the genomic sequencing company issued a 2022 revenue outlook that was ahead of consensus.
Fed Chair Jerome Powell testified before a Senate committee on Tuesday as part of his re-confirmation process. Powell said that he expected a normalized supply chain to help ease inflation pressures in 2022 but said the Fed would not be afraid to hike rates further than projected if inflation remains high.
“If we have to raise interest rates more over time, we will. We will use our tools to get inflation back,” Powell said.
However, stocks and bonds both moved higher during Powell’s testimony as he did not announce an accelerated change in policy from what the central bank had already signaled.
“Powell noted that the balance sheet runoff will occur later in 2022 and that ‘it’s a long road back to normal’. On net, the Chair’s comments are consistent with a willingness to deliver the liftoff hike in March assuming there isn’t a dramatic reversal in the pace of consumer price gains,” Ian Lyngen of BMO said in a note to clients.
Tuesday’s market moves follow a sharp rally on Monday afternoon, which saw the Nasdaq erase a 2.7% loss to finish slightly higher and snap a four-day losing streak. The Nasdaq is now down about 3.1% since the start of 2022 and more than 5% from its record closing high in November.
Looking ahead, investors will get an updated look at the state of the economy later in the week, with inflation data due out on Wednesday and major bank earnings on Friday.