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Dow rallies 400 points as market comeback from the year’s lows gains steam

U.S. stocks were sharply higher on Tuesday as the market tried to bounce from a punishing bear market for the tech-heavy Nasdaq and a sharp pullback for the S&P 500.

The Dow Jones Industrial Average jumped more than 300 points, or 1%. The S&P 500 gained 1.3%, while the Nasdaq Composite added 1.7%.

Those gains marked the market’s latest attempt at a recovery following weeks of steep losses. The S&P 500 is coming off a six-week losing streak — its longest since 2011. The Dow, meanwhile, has fallen for seven straight weeks, marking its longest weekly slide since 2001. Year to date, the S&P 500 and Dow are down 15.9% and 11.3%, respectively.

“Our inputs today support the kind of momentum that we saw on Friday and a continuation of that,” said Art Hogan, chief market strategist at National Securities. “But the most important thing for investors is you get to a point where you’ve priced in a lot of worst case scenarios.”

Shares of Citigroup and Paramount Global surged on Tuesday after Berkshire Hathaway disclosed its holdings in the two companies. Citigroup jumped 6% after Warren Buffett’s conglomerate revealed it added a nearly $3 billon stake in the struggling bank during the first quarter.

Citi shares have underperformed the rest of the financial sector in the past 12 months, down nearly 40% while the Financial Select Sector SPDR Fund is off by 12% over the same period.

Meanwhile, shares of Paramount Global also surged nearly 13% after Berkshire built a stake worth $2.6 billion in the company as of the end of March.

Semiconductor stocks climbed. Shares of Advanced Micro Devices jumped more than 4% following an upgrade from Piper Sandler, which said the stock looked attractive after falling 34.5% this year. Nvidia’s stock price rose 3%, Qualcomm’s jumped 2.4% and Micron Technology’s rose 2%.

Travel stocks popped after United Airlines raised its revenue outlook for the second quarter on improved consumer demand. United Airlines’ stock price rose 4%, Delta’s jumped 3% and American Airlines’ advanced 3%.

Home Depot shares rose more than 3% after the home improvement retailer posted better-than-expected quarterly results. The company also raised its full-year outlook.

Meanwhile, Walmart shares dropped more than 5% after the retail giant reported an earnings miss because of inflation pressure. The company raised its sales outlook, but lowered its profit forecast.

Investors will also be monitoring comments from Federal Reserve Chairman Jerome Powell who will speak on the central bank’s plans to address inflation at a Wall Street Journal conference at 2 p.m. ET.

On the economic front, retail sales numbers came in about as expected. Consumer spending on retail rose 0.9% in April, according to the U.S. Census Bureau. They rose 0.4% excluding spending on autos.

Inflation concerns

Wall Street seemed to largely shake off concerns of inflation on Tuesday, though some investors are worried the economy could ultimately tip into a recession.

“We see clear late-cycle indicators, and while the risk of economic growth contraction or recession has risen steadily through the first four-and-a-half months of this year, we are now beginning to cross over a probability level that makes recession a base case for the end of this year and beginning of next,” Darrell Cronk, president of Wells Fargo Investment Institute wrote in a note Monday.

The firm added that ultimately it should be a “relatively mild economic growth contraction and a short-lived one.”

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