U.S. Stocks Resume Recent Rally After Yesterday's Pullback

(RTTNews) - Stocks showed a strong move to the upside during trading on Tuesday, more than offsetting the pullback seen in the previous session. The major averages all climbed firmly into positive territory, with the tech-heavy Nasdaq leading the way higher.

The major averages gave back some ground after reaching new highs going into the close of trading. The Dow advanced 254.47 points or 0.7 percent to 34,807.46, the Nasdaq spiked 270.36 points or 2 percent to 14,108.82 and the S&P 500 jumped 50.43 points or 1.1 percent to 4,511.61.

The rebound on Wall Street came as stocks resumed the strong upward move seen last week following a brief pause in the recovery rally on Monday.

The Dow had closed higher for five consecutive sessions before Monday's drop, while the Nasdaq had soared more than 9 percent after hitting its lowest closing level in over a year last Monday.

Wall Street benefited from strength in the overseas markets, which largely shrugged off Federal Reserve Chair Jerome Powell's comments suggesting the central bank may raise interest rates more aggressively.

In remarks to the National Association for Business Economics, Powell said the Fed could raise rates by more than 25 basis points at upcoming meetings if necessary to ensure a return to price stability.

On the heels of Powell's remarks, CME Group's FedWatch Tool is currently indicating a 33.9 percent chance the Fed will raise rates by 25 basis points in May and a 66.1 percent chance of a 50 basis point rate hike.

Among individual stocks, shares of Alibaba (BABA) mved sharply higher after the Chinese e-commerce giant increased its share buyback program to a record $25 billion.

Athletic apparel and footwear giant Nike (NKE) also posted a notable gain after reporting fiscal third quarter results that beat analyst estimates on both the top and bottom lines.

Meanwhile, shares of Okta (OKTA) moved to the downside after the authentication services provider said it is investigating reports of a digital breach.

Sector News

Airline stocks showed a substantial rebound following the pullback seen in the previous session, with the NYSE Arca Airline Index soaring by 2.5 percent.

A continued spike by treasury yields also contributed to significant strength among financial stocks, driving the KBW Bank Index and the NYSE Arca Broker/Dealer Index up by 2.3 percent and 2.2 percent, respectively.

Tobacco stocks also turned in a strong performance after ending yesterday's trading sharply lower, resulting in a 1.4 percent advance by the NYSE Arca Tobacco Index.

Altria (MO) posted a notable gain after Goldman Sachs upgraded its rating on the tobacco producer's stock to Buy from Neutral.

Biotechnology, retail and computer hardware stocks have also moved to the upside on the day, while gold and oil stocks moved lower along with the prices of the associated commodities.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index shot up by 1.5 percent, while Hong Kong's Hang Seng Index spiked by 3.2 percent.

The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.5 percent, the German DAX Index and the French CAC 40 Index jumped by 1 percent and 1.2 percent, respectively.

In the bond market, treasuries extended the steep drop seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.8 basis points to 2.373 percent, reaching its highest closing level since May 2019.

Looking Ahead

Following a couple quiet days of the U.S. economic front, trading on Wednesday may be impacted by reaction to a report on new home sales.