US stocks rose Thursday, rebounding from heavy losses in the previous session as investors added key technology stocks after the retreat.
The Dow Jones Industrial Average rose 510 points while the S&P 500 rose 1.5% as all 11 sectors traded in the green. The tech-heavy Nasdaq Composite also gained 1.5% as Apple and Microsoft both gained more than 2%. Alphabet and Facebook each rose more than 1%.
“This bull market has to go on in the end,” said Keith Lerner, chief market strategist at Truist. “Investors who are underweight stocks should try to identify market weakness and become more aggressive.”
The classic reopening businesses, including airlines and cruise lines, also skyrocketed. American Airlines, United and Delta also gained more than 2%, while Carnival and Norwegian also gained more than 2%.
The stock market had a huge hit on Wednesday, causing technology stocks to move lower as key inflation data showed above-than-expected price pressures.
The Dow fell 680 points on Wednesday, its worst session since January. The S&P 500 was down 2.1%, its largest one-day decline since February, while the tech-heavy Nasdaq Composite was down 2.6%.
Traders across the board pointed to a rate hike triggered by a higher-than-expected inflation report for the week’s slump.
The Department of Labor reported that the prices American consumers pay for goods and services rose the fastest since 2008 last month, with the consumer price index up 4.2% year over year.
“We don’t think yesterday’s inflationary pressures will change the longer-term case for inflation after trading reopens, and that is ultimately important for markets,” AB Bernstein strategist Inigo Fraser-Jenkins said in a note.
Investors largely shook off another hot inflation report on Thursday. Producer prices rose by more than 6% in April compared to the previous year.
Investors have been quick to dump growth stocks on creeping inflation worries as rising prices tend to squeeze margins and hurt corporate profits. If price pressures get too high over a long period of time, the Federal Reserve would be forced to tighten accommodative monetary policy.
Tech, a best-performing sector in 2020 amid the height of the Covid-19 pandemic, has come under heavy pressure in recent weeks.
The S&P 500 and Dow are still down more than 2% this week. The Nasdaq Composite is the worst performer among the major averages, trailing 4% this week.
Bitcoin fell 9% after Elon Musk tweeted that Tesla would stop car purchases with Bitcoin due to environmental concerns, a surprising reversal for the crypto backer. Coinbase, which just went public with the promise that crypto trading will go mainstream, fell 2% on Musk’s comments.
– CNBC’s Maggie Fitzgerald and Patti Domm contributed to this report.
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