US stocks lose early loss, rise as technology stocks gain ground

Shares lost an early loss and rose in afternoon trading on Wall Street Tuesday as technology stocks reversed course and moved higher.

The S&P 500 rose 0.9% as of 3:16 p.m. Eastern. The benchmark index is coming off five consecutive losses and has not gained a day since the first trading day of the year, when it hit an all-time high.

The Dow Jones Industrial Average rose 185 points, or 0.5%, to 36,255 and the tech-heavy Nasdaq rose 1.4%.

Traders are trying to calibrate how markets and the economy will cope with the higher interest rates likely to come from the Federal Reserve this year. That weighs most heavily on expensive technology stocks, which become less attractive to investors as interest rates rise.

Technology stocks have been choppy since late Monday, when a late afternoon rally for the sector cut much of the losses in the broader market. Apple rose 1.5% and chipmaker Nvidia rose 1.5%.

Retailers and other companies that depend on direct consumer spending also gained ground. Las Vegas Sands was up 7.5% and Gap was up 3.2%.

Energy futures rose. The price of US crude oil rose 3.8%, boosting energy stocks. Exxon Mobil rose 3.9%.

Bond yields were broadly stable, although they have risen sharply since the start of the year. The yield on the 10-year Treasury fell from 1.77% at the end of Monday to 1.75%.

Utilities and other investments considered less risky declined.

The Fed has said it will accelerate the phasing out of its bond purchases, which have helped keep interest rates low. The market now estimates the probability of the Fed raising short-term interest rates by at least a quarter point in March at about 78%. A month ago it was about 36%.

The central bank is easing support for the US economy and financial markets as businesses and consumers face continued rising inflation.

Fed Chair Jerome Powell acknowledged Tuesday that high inflation has emerged as a serious threat to the Fed’s goal of getting more Americans back to work and that, if necessary, the Fed will raise interest rates more than they currently have. plans to contain rising prices. Powell spoke at a hearing of the Senate Banking Committee, which is considering his nomination for a second four-year term.

The World Bank lowered its forecast for the global economy, partly to blame for supply chain problems that have fueled inflation. The poverty reduction bureau of 189 countries forecasts global economic growth of 4.1% for this year, down from the 4.3% growth it forecast in June last year. It is also lower than the 5.5% growth that the global economy estimates will be in 2021.

Investors are getting two key inflation reports from the Department of Labor this week. The consumer price index for December will be released on Wednesday and will provide an update on how inflation is driving the price of goods for consumers. An index based on US wholesale prices in December will be released on Thursday and will provide another update on how inflation is impacting costs for businesses.

Wall Street is also looking at the rising number of coronavirus cases worldwide to gauge its economic impact. China, the world’s second largest economy, has locked down a third city over the latest wave.

Major companies, including automakers such as Toyota, have been counting on a recovery in supplies of semiconductor chips and other products from China and the rest of Asia as vaccinations and other coronavirus prevention efforts have advanced. The recent surge in infections from the ommicron strain of the coronavirus has shaken those hopes.