Wall Street made gains on Tuesday, disregarding reduced global growth forecasts. Strong housing market data, despite inflationary pressures, boosted investor confidence. Dovish remarks about checking the interest rate hikes from the Fed allayed fears of an economic slowdown. However, government bond yields kept rising and touched a three-year high. All the three major indexes ended in the positive zone.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 1.5% or 499.51 points to close at 34,911.20. Twenty-six components of the 30-stock index ended in the green, one remained unchanged, while three closed in the red.
The tech-heavy Nasdaq Composite gained 2.2% or 287.30 points to finish at 13,332.36, led by a rally in tech stocks.
The S&P 500 moved up 1.6% or 70.52 points to end at 4,462.21. Ten of the 11 broad sectors of the benchmark index closed in the green.
The Consumer Discretionary Select Sector SPDR (XLY), the Real Estate Select Sector SPDR (XLRE) and the Communication Services Select Sector SPDR (XLC) rose 2.9%, 2.1% and 2%, respectively. The Energy Select Sector SPDR (XLE) slipped 0.8%.
The fear-gauge CBOE Volatility Index (VIX) went down 3.6% to 21.37. A total of 10.53 billion shares were traded on Tuesday, lower than the last 20-session average of 11.67 billion. Advancers outnumbered decliners on the NYSE by a 2.06-to-1 ratio. On Nasdaq, a 3.01-to-1 ratio favored advancing issues.
IMF Joins The World Bank In Bringing Down Growth Forecast
The International Monetary Fund released its April edition of World Economic Outlook on Tuesday, wherein it cut the global forecast by nearly 1 percentage point for 2022. It joined the World Bank in bringing down the global growth forecast and cited the Ukraine War as the main reason.
10-Year Treasury Yield Touches 3-Year High, Oil Prices Dip
On Tuesday, the benchmark 10-year U.S. Treasury yield touched 2.94%, its highest level since late 2018, as investors remained concerned about rising inflation and tighter monetary policy.
Amidst concerns about global supply due to the Ukraine War, growth concerns weighed on oil markets. Brent crude went down 5.35%, at $107.11/barrel. U.S. crude was down 5.34% at $102.43/barrel.
Dovish Remarks From Fed Drives Market
After weeks of growing concern about the impending aggressive interest rate hikes by the Fed, fears about an economic slowdown were allayed somewhat on Tuesday, following comments from Fed officials. They indicated that the rate hikes might not cross 50 basis points as was earlier expected. Stocks rallied after these comments as the tech-heavy Nasdaq led the surge.
Shares of International Business Machines Corporation IBM and DocuSign, Inc. DOCU gained 2.4%, and 5.9%, respectively. DocuSign carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly announced that building permits in March increased to a seasonally adjusted annual rate of 1,873,000 compared with expectations of 1,825,000. This is 0.4% above the revised February numbers of 1,865,000.
Housing starts in March increased at a seasonally adjusted annual rate of 1,793,000 compared with expectations of 1,731,000. This is 0.3% above the revised February figures of 1,788,000.
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