Tech Leads US Stocks Higher as Dip Buyers Emerge: Markets Wrap
Stocks continued to rise as dip buyers jumped back into the market after a roughly $6.5 trillion selloff in global equities over the past few weeks.
The S&P 500 gained more than 1.5%, with all major groups higher, following the gauge’s worst rout in almost two years. The Nasdaq 100 rose as much as 2.1%. Goldman Sachs Group Inc. noted that buying US shares after a slump of the scale witnessed over the past month has usually been profitable. Since 1980, the US benchmark has generated a median return of 6% in the three months following a 5% decline from a recent high.
US Treasuries fell as demand for haven assets waned globally. Traders are also dialing back expectations of deep cuts from the Federal Reserve. Swaps now point to about 110 basis points of easing this year, compared to as much as 150 basis points on Monday. Wall Street’s “fear gauge” — the VIX — tumbled after closing at the highest level since 2020. The dollar rose, and Bitcoin and Ether rebounded.
Among notable stock moves, Caterpillar Inc. (CAT) jumped on a bullish outlook, while Uber Technologies Inc. (UBER) rallied on better-than-expected orders. There’s at least one silver lining from this week’s drama on Wall Street and beyond: Key defensive investing strategies are alive and well, restoring faith in hedging trades that have misfired in recent years.
After failing to live up to their protective mission in the inflation-driven rout, Treasuries have rallied throughout the stock meltdown. Their 60-day correlation with the S&P 500 is nearing negative territory, signaling they are once again hedging equities effectively.
