U.S. stocks rose on Wednesday as tech shares led a broad rally, clawing back some of their losses after a rough start to the year.
The Nasdaq Composite jumped 2.08% to close at 14,490.37. The S&P 500 gained 1.5% to 4,587.18, while the Dow Jones Industrial Average rose 305.28 points, or 0.86%, to close at 35,768.06.
Wednesday’s gains were highlighted by some of the same stocks that outperformed during the pandemic lockdowns in 2020. E-commerce stock Shopify gained more than 5%, while Etsy gained 3.8%. Stay-at-home favorites such as DocuSign and Zoom Video jumped 5.2% and 4.8%, respectively.
Facebook-parent Meta, which had pulled back dramatically after issuing disappointing guidance last week, saw its stock bounce 5.4% on Wednesday.
Wednesday marked the second straight positive day for the Nasdaq, and the average has gained more than 8% since its recent closing low on Jan. 27 after falling into correction territory earlier this year.
“You have a lot of different constituents in the markets these days. You’ll have the guys who are trading short-term, and obviously for a lot of the stay-at-home stocks we saw get pummeled over the last few months are at much lower multiple levels that make them attractive on a trade basis,” said Wayne Wicker, chief investment officer at MissionSquare Retirement.
On the other hand, investors who are more fundamentally oriented could be bidding up stocks that could benefit from a strong economy, as the pandemic becomes less of a worry for consumers, such as travel stocks, Wicker said.
Shares of Norwegian Cruise Line Holdings rose 4.3%, and Delta Air Lines added nearly 3%, on Wednesday as concerns about omicron fade from the market. New York State announced on Wednesday that it was lifting its indoor mask mandate.
On the earnings front, Chipotle rose more than 10% on the back of its strong quarterly numbers, while Lyft gained 6.8% despite announcing it had fewer active riders than in the prior quarter.
Solar stock Enphase Energy surged 12% after the company beat estimates on the top and bottom lines for the fourth quarter and delivered upbeat guidance. The result appeared to boost other stocks in the burgeoning industry as well, with SolarEdge Technologies jumping nearly 7%.
As of the opening bell on Wednesday, roughly 60% of all S&P 500 companies have reported fourth-quarter earnings and about 77% have topped Wall Street’s earnings estimates, according to FactSet. Disney, Mattel, MGM Resorts and Uber Technologies will release results after the bell on Wednesday.
Investors are also preparing for Thursday’s Consumer Price Index report, which will give an update on the inflation picture. The Fed has already signaled a monetary policy pivot in order to address the historically high price increases.
The inflation data is estimated to show that prices rose 0.4% in January, for a 7.2% gain from one year ago, according to Dow Jones.
“If you had asked me last week, I would have said well, a lower number, the market’s going to really rock because the market is pretty oversold. Well now we’ve come back quite a bit, so I think that the risk-reward is even,” said Andrew Slimmon, managing director at Morgan Stanley Investment Management.
“What we’re counseling investors is hey, take advantage of the drawdowns. Don’t chase when the market comes roaring back. And I suppose now it has come back quite a bit,” Slimmon added.
Bond yields cooled slightly Wednesday amid a dramatic surge in 2022, possibly giving a boost to tech. The benchmark 10-year Treasury note traded near 1.945% after touching 1.97% on Tuesday.
Mortgage applications dropped 10% week over week, however, as the rise in interest rates in recent months appears to have dampened demand among homebuyers.
Yields have risen this year in part because of a more aggressive stance from the Federal Reserve. Atlanta Fed President Raphael Bostic told CNBC on Wednesday that three rate hikes are possible this year but that the central bank is not locked in to any path and will watch how the economy responds. Cleveland Fed President Loretta Mester said the central bank would be prepared to hike rates at any meeting this year.