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S&P 500 Climbs as Tech Strength Prevails Despite Surging U.S. Bond Yields

Published 02/08/2022, 03:59 PM
Updated 02/08/2022, 04:10 PM
© Reuters.

By Yasin Ebrahim

Investing.com – The S&P 500 jumped Tuesday, as technology stocks staged an intraday recovery, and financials rode on the coattails of surging Treasury yields ahead of an inflation report later this week.   

The S&P 500 rose 0.8%, the Dow Jones Industrial Average added 1%, or 372 points, the Nasdaq added 1.3%.

The United States 10-Year yield briefly jumped to 1.97%, its highest level since August 2019, supported by ongoing bets for the Federal Reserve to tighten monetary policy aggressively to curb inflation. 

Expectations for rate hike bets will come under the spotlight later this week, when the U.S. is expected to report Thursday that consumer inflations remains elevated.

The backdrop of rising yields paved the way for banking stocks to rack up gains with Signature Bank (NASDAQ:SBNY), Regions Financial (NYSE:RF), and JPMorgan (NYSE:JPM) leading the charge.

A rising rate environment boosts the net interest margin of banks – the difference between the interest income generated by banks and the amount of interest paid out to depositors.

Tech stocks were back in demand, led Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT), with the latter reportedly considering an offer for cybersecurity company Mandiant, according to Bloomberg.

Facebook-parent Meta Platforms, however, struggled to turn the tide of negative bets following a more than 30% decline since reporting quarterly results last week.

Chip stocks also played a role in steadying the broader tech sector, with Nvidia (NASDAQ:NVDA) paring early-day losses after walking away from its $40 billion deal to acquire UK chipmaker ARM from Softbank (OTC:SFTBY), citing “significant regulatory challenges.”

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Marvell Technology (NASDAQ:MRVL), Wolfspeed (NYSE:WOLF), and ON Semiconductor (NASDAQ:ON) also pushed chip stocks higher, with latter rallying nearly 6% after reporting quarterly results and guidance topped Wall Street estimates.

Pfizer (NYSE:PFE) was a major drag on healthcare stocks after it reported fourth quarter results that missed estimates on the top line, while guidance also fell short of Wall Street estimates.

The pharmaceutical giant raised its guidance on vaccine revenue for 2022, by $1 billion to $32 billion, but that still was below analysts’ forecast of $33.79 billion.

Novavax (NASDAQ:NVAX), meanwhile, slumped 12% after Reuters reported that the company had only supplied a small number of the 2 billion COVID-19 shots targeted for this year, leading some countries to reassess their planned usage of the vaccines.

Peloton Interactive (NASDAQ:PTON) cut its full-year revenue outlook after swinging to a quarterly loss. Shares of the connected fitness equipment company surged 25%, however, after revealing that its chief executive Jack Foley would be stepping down.

The company also announced 2,800 job cuts as part of a restricting program that some see as a move to boost its attractiveness for a sale, with Amazon, Nike (NYSE:NKE) and other suitors rumored to be circling.

Harley-Davidson (NYSE:HOG) ended the day more than 15% higher after swinging to a surprise profit in the fourth quarter of the year, driven by increased sales of higher margin motorcycles.

Latest comments

Rise to fall
Tutes need BTFD and newbies put money, so they can sell off.
...so now the 10 year bond yield doesn't effect tech stocks? 🤣
 the yields impact the hedge funds that borrow money to invest. Has very little to do with the companies themselves.  Instead, the focus is on market liquidity. There is absolutely no reason for the markets to surge the way they did today unless this was just a farce by the Fed so individuals could prolong QE for their own personal portfolios and their friends on Wall Street.
people don't trust government/FED anymore
Ok that’s strange. Just posted a bearish statement and got block by the moderator. So the moderator only wants bullish statements. Ok. I will go to the moon then.
 Mr Warren. I think also the USA inflation figure is going to shock some out of their pants
Right. The whole forecast amd outlook has been nothing bur bearish. Now they say the opposite. Sounds like manipulation
don't worry. it's only temporary 😉
it's all being priced in
Stocks will prevail despite the world being on fire
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