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

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S&P 500 Climbs as Tech Strength Prevails Despite Surging U.S. Bond Yields
Credit: © 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.”

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% after swinging to a surprise profit in the fourth quarter of the year, driven by increased sales of higher margin motorcycles.

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