Wall Street snaps back from tech-fueled rout, lifting Dow more than 400 points

Technology shares led the rebound, just as they drove the three-day rout that dragged the tech-centric Nasdaq into correction territory. Tesla shot up 10.9 percent after its 21.1 percent free-fall on Tuesday, when it was announced the electric car company had not made the cut for the benchmark S&P 500 index as expected. Microsoft jumped 4.3 percent, Apple added 4.0 percent, Amazon climbed 3.8 percent and Alphabet moved up 1.6 percent. (Amazon founder and chief executive Jeff Bezos owns The Washington Post.)

Kristina Hooper, chief global market strategist at Invesco, said the sentiment fueling Wednesday’s rally is the same as the one that has driven investors into stocks for the past six months — there are no real alternatives for finding favorable returns. Plus, the Federal Reserve has accommodated Wall Street through its expansive monetary policy.

“Jay Powell has become Santa Claus, the Tooth Fairy and a leprechaun with a pot of gold, all wrapped into one,” she said, referring to the Fed’s chair. “Now that doesn’t mean stocks won’t be volatile and they won’t have their down days. But we have to recognize that the Fed is a powerful force that is likely to drive investors back into equities, especially tech.”

Analysts say the sell-off was a healthy sign of the stock market returning to Earth, after an extraordinary run. The massive gains on Wall Street highlighted the disconnect between soaring valuations and the broader economy, which is still limping under the weight of high unemployment and ongoing pandemic-related disruptions to daily life.

The S&P and the Nasdaq had set record highs several times over last month. But those gains were largely wiped in three volatile trading days in what has been a historically poor performing month. Though Wednesday’s session delivers at least a temporary reprieve to the frenzied selling, broader economic and political issues will continue to weigh on investors, including trade tensions with China, stalled coronavirus stimulus negotiations and uncertainty over the upcoming election.

Meanwhile, the virus itself continues to kill thousands of Americans every week. At least 187,000 people have died of covid-19-related illnesses, and more than 6.3 million have become infected.

AstraZeneca shares fell 1.7 percent after the pharmaceutical giant paused the global trial of its coronavirus vaccine candidate after a participant in the United Kingdom suffered what is suspected to be a severe adverse reaction. In a statement, the company said it voluntarily suspended its late-stage trial to determine the cause of the unexplained illness. AstraZeneca is developing the vaccine alongside the University of Oxford, and is one of several drug companies racing to create and vet a way to prevent novel coronavirus infections.

On Thursday the federal government will report the first glimpse of new jobless claims for the month of September. Last week, more than 800,000 new claims for unemployment insurance were filed the preceding week, another sign that the pandemic continues to batter the labor market more than five months in.

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