US STOCKS-Wall Street bounces as tech rebounds

  • Reuters
  • Stock Market News
US STOCKS-Wall Street bounces as tech rebounds
Credit: © Reuters.

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* Tech-related stocks lead gains on the Dow

* Tesla climbs after biggest one-day drop

* Tiffany drops as LVMH abandons its $16 bln takeover

* Dow up 2.3%, S&P 500 up 2.48%, Nasdaq up 2.89% (Updates to midafternoon, changes byline)

By Chuck Mikolajczak

NEW YORK, Sept 9 (Reuters) - Wall Street's main indexes rallied on Wednesday to stanch the bleeding after a three-day drop as investors jumped back in to take advantage of the repricing in technology-related stocks, a day after the Nasdaq confirmed correction territory.

Tesla Inc TSLA.O shares jumped 7.7% after suffering their biggest one-day percentage drop in the prior session, while Apple Inc AAPL.O , Microsoft Corp MSFT.O and Amazon.com Inc AMZN.O - the top three U.S. public companies by market capitalization - each rose by at least 4%.

Other stay-at-home winners such as Facebook Inc FB.O and Google-parent Alphabet Inc GOOGL.O also climbed, a day after the tech-heavy Nasdaq ended 10% below its Sept. 2 record closing high, commonly known as a correction.

"Call off the five-alarm fire, it's not here," said Peter Kenny, founder, Kenny's Commentary LLC and Strategic Board Solutions LLC in Denver.

"It is very important to realize those mega-cap names have pulled the market higher and higher, so far out of range as of last week that the market did have to come back in to some sort of reversion to the mean."

Kenny said the Nasdaq's ability to hold its 50-day moving average, a technical support level, was key in reversing the market's direction.

In late afternoon trading, the Dow Jones Industrial Average .DJI was up 631.27 points, or 2.3%, at 28,132.16, the S&P 500 .SPX gained 82.5 points, or 2.48%, to 3,414.34 and the Nasdaq Composite .IXIC added 313.46 points, or 2.89%, to 11,161.15.

U.S. stocks have become susceptible to volatility as market leadership has narrowed during the year to a handful of heavyweight tech-related stocks as traders bid up their shares in a rally that triggered a Nasdaq-led rebound for Wall Street from its pandemic lows in March.

The recent pullback has also been driven by worries that sellers of call options would unwind massive amounts of stocks they bought as hedges during the rally.

Media reports last week said SoftBank Group Corp 9984.T has made big bets on equity derivatives tied to tech firms.

In a sign of growing unease about the positioning in tech stocks, skew, a measure of demand for protective put options in relation to call options, has risen sharply. volatility is expected to further increase in the run-up to the U.S. presidential election, with September and October also historically turbulent months of the year.

In a reversal from the prior three sessions, growth stocks .IGX jumped 3% to outperform the 1.7% climb in value stocks .IVX on the day.

Market participants were watching for signs of a widening in market breadth, supported by improving economic data.

AstraZeneca Plc AZN.L could resume trials for its experimental coronavirus vaccine next week, the Financial Times reported, after the British drugmaker paused global trials of its experimental COVID-19 vaccine. Still, its U.S.-listed shares fell 1.5%. & Co TIF.N tumbled 6.2% after French luxury goods giant LVMH LVMH.PA warned it was set to walk away from its planned $16 billion takeover of the U.S. jeweler. issues outnumbered declining ones on the NYSE by a 3.24-to-1 ratio; on Nasdaq, a 2.19-to-1 ratio favored advancers.

The S&P 500 posted 2 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 30 new highs and 20 new lows.

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