NEW YORK (AP) — Stocks are ending higher on Wall Street Tuesday, clawing back some of the ground they lost last week in their worst weekly drop since the beginning of the pandemic. The S&P 500 rose 2.4%. It’s still 21.5% below the record high it set in January. The tech-heavy Nasdaq climbed 2.5% and the Dow Jones Industrial Average added 2.1%. Markets will be closely watching congressional testimony this week from Federal Reserve Chair Jerome Powell for more clues about the Fed’s thinking about inflation and future interest rate hikes. The yield on the 10-year Treasury note rose to 3.30%.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
NEW YORK (AP) — Stocks rose broadly on Wall Street Tuesday, clawing back some of the ground they lost in their worst weekly drop since the beginning of the pandemic.
The S&P 500 rose 2.7% as of 3:25 p.m. Eastern, on pace to recoup a little bit less than half of the benchmark index's losses last week. The Dow Jones Industrial Average rose 694 points, or 2.3%, to 30,585 points and the Nasdaq jumped 2.8%.
Technology stocks had some of the strongest gains. Apple rose 3.4% and Microsoft rose 2.5%.
Retailers, health care companies and banks also made solid gains. Kellogg rose 2.3% after the maker of Frosted Flakes and Rice Krispies said it would split into three companies. Spirit Airlines jumped 8% after JetBlue sweetened its buyout offer for the budget airline.
European markets ended mostly higher, while Asian markets closed mixed overnight. The yield on the 10-year Treasury rose to 3.30% from 3.23% late Friday. Markets were closed Monday for the observation of Juneteenth.
Roughly 90% of stocks within the S&P 500 gained ground. The index remains stuck in a slump, though, along with every other major index, and is still down about 21% from the record high it set in January. It's posted a weekly loss in 10 out of the last 11 weeks.
Stocks have been generally sliding as investors adjust to higher interest rates that the Federal Reserve and other central banks are increasingly doling out. The aggressive rate hikes are part of a plan to temper record-high inflation, but investors are worried that the Fed risks slowing economic growth too much and bringing on a recession.
The worries over inflation and interest rates have been worsened by a spike in energy prices following Russia's invasion of Ukraine. The price of U.S. crude oil rose 1% to settle at $110.65 per barrel Tuesday. It's up about 52% for the year. That has taken a bigger bite out of people's wallets at the gas pump and is prompting a slowdown in spending elsewhere.
The lingering list of worries has made for an extremely turbulent market. Daily swings between gains and losses has been common and major indexes have sometimes shifted between sharp gains and losses on an hourly basis.
“In these kinds of markets, you just get bigger volatility in both directions,” said Ross Mayfield, investment strategist at Baird. “The entire market is being shaped by the Fed and inflation numbers.”
Last week, the Fed hiked its key short-term interest rate by triple the usual amount for its biggest increase since 1994. It has also just begun allowing some of the trillions of dollars of bonds it purchased through the pandemic to roll off its balance sheet. That should put upward pressure on longer-term interest rates and is another way central banks are yanking supports earlier propped underneath markets to bolster the economy.
The Fed’s moves are happening as some discouraging signals have emerged about the economy, including sagging spending at retailers and soured consumer sentiment. The National Association of Realtors on Tuesday reported that sales of previously occupied U.S. homes slowed for the fourth consecutive month. The housing market, a crucial part of the economy, is slowing as homebuyers face record high prices and sharply higher home financing costs than a year ago following a rapid rise in mortgage rates.
Investors will be closely listening for clues about the Fed's plans for possible additional rate hikes when Chair Jerome Powell speaks before congressional committees this week. The central bank could consider another such mega-hike at its next meeting in July, but Powell has said increases of three-quarters of a percentage point would not be common.
Veiga reported from Los Angeles.