U.S. stocks rebounded from a violent selloff to post the biggest rally in 15 months as investors poured back into some of the most beaten-down sectors.
Technology, materials and consumer shares paced a 1.7% gain in the S&P 500, while DowDuPont and Home Depot led a 567-point surge in the Dow, the biggest gain in two years. The ride wasn’t straight up, though. The Dow plunged more than 500 points at the open, adding to anxiety after Monday’s rout — the worst in almost seven years. Stocks swung between gains and losses no fewer than a dozen times before a late-session rally.
The Dow finished down on Monday by 4.6%, or 1,175 points, its steepest percentage drop since Aug. 24, 2015, and largest single-day point drop ever. The S&P 500 traced a similar trajectory, with a decline of 4.1%.
On Tuesday, What began with rising bond yields became a selloff across global equity markets late last week, as investors feared the return of inflation and higher rates that could erode profitability for companies already trading at elevated valuations. Traders are watching how the moves unfold from here — a sustained stock slump has the potential to undermine consumer and business sentiment, crimp borrowing and possibly begin to curtail global growth.
“Based on where we stand relative to historic averages, there may be more pain ahead,” David Lebovitz, global market strategist at JPM Asset Management, said in a message. “However, with economic growth solid, profits rising and central banks only normalizing policy at a gradual pace, it seems reasonable to expect that we will look back on this a few months from now and not even remember what the initial plunge felt like.”
The benchmark for U.S. share volatility went through wild gyrations after hitting a two-year high. Elsewhere, Treasury yields swung before nudging higher. The greenback was little changed after two days of gains. Oil declined and metals fell. Bitcoin traded around $7,600 after at one point sinking below $6,000 for the first time since October.