Stocks turn mixed on Wall Street a day after big sell-off

A man wearing a face mask walks past a bank's electronic board showing the Hong Kong stock index in Hong Kong, Tuesday, May 10, 2022. Asian stocks followed Wall Street lower on Tuesday as fears grew that US rate hikes to fight inflation could stall economic growth.  (AP Photo/Kin Cheung)

A man wearing a face mask walks past a bank’s electronic board showing the Hong Kong stock index in Hong Kong, Tuesday, May 10, 2022. Asian stocks followed Wall Street lower on Tuesday as fears grew that US rate hikes to fight inflation could stall economic growth. (AP Photo/Kin Cheung)

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Wall Street stock indices ended a choppy trading day with a mixed finish on Tuesday, after an afternoon rally in tech companies helped reverse an early decline.

The S&P 500 closed 0.2% higher, ending a three-day losing streak, after hovering between a 1.9% gain and a 0.8% loss. A day earlier, the benchmark fell 3.2% to its lowest level in more than a year.

The Dow Jones Industrial Average slid 0.3%, while the tech-heavy Nasdaq climbed about 1%.

Big tech stocks, which have been swinging sharply up and down recently, have helped offset losses elsewhere in the market.

The market’s sawtooth action preceded the release of the Department of Labor’s Consumer Price Index, a key economic report on inflation that investors will be watching closely as they try to price with how aggressively the Federal Reserve will raise interest rates in its fight against inflation.

Economists expect the index to have fallen to 8.1% in the 12 months to April. This would mark the first annual decline since August.

“If inflation is much lower, as they expect, then we could very well see the markets recover because maybe people think the Fed won’t be hiking as much or as aggressively” , said Randy Frederick, Managing Director of Trading & Derivatives at Charles Schwab.

The S&P 500 rose 9.81 points to 4,001.05. The Dow slipped 84.96 points to 32,160.74. The Nasdaq gained 114.42 points to 11,737.67.

The Russell 2000 Small Business Index fell 0.29 points, or less than 0.1%, to 1,761.79.

Big tech stocks, which have been swinging sharply up and down recently, accounted for much of the S&P 500 rally. Apple rose 1.6% and Microsoft 1.9%.

Gains in communications and healthcare stocks also helped lift the market, offsetting declines in the financial, real estate and other sectors.

Bond yields ended mixed. The 10-year Treasury yield fell to 2.99% from 3.08% on Monday evening.

Treasury yields have risen and stocks have been extremely volatile recently as Wall Street adjusts to an aggressive reversal of Federal Reserve policies away from supporting the economy. The central bank is raising interest rates to historic lows to combat the persistent rise in inflation, which is at its highest level in four decades.

The Fed raised its benchmark rate from near zero, where it has sat for much of the coronavirus pandemic. Last week, he indicated he would double the size of future increases.

Higher prices for raw materials, shipping and labor have reduced financial results and company forecasts. Many companies have hiked prices for everything from clothes to food, raising fears that consumers may cut back on spending, hurting economic growth.

Russia’s continued invasion of Ukraine has only heightened concerns about rising inflation. The conflict has pushed already high oil and natural gas prices even higher, while putting further pressure on the costs of key food items such as wheat and corn. U.S. crude oil prices fell 3.2% on Tuesday, but are up about 36% in 2022. Wheat prices are up more than 40% for the year.

If Wednesday’s consumer price index showed a decline in inflation compared to a year ago, that could encourage investors to buy, at least for a little while.

“Very short-term, we’re a bit oversold,” Frederick said. “So if we could get a lower 8% print year over year, I think we could get a little rally in the market.

Still, most recent market rallies have often been followed by a day of declines, he added.

Meanwhile, investors are still eyeing the latest round of corporate earnings with mixed results. Peloton fell 8.7% as the former pandemic investor darling reported results far weaker than Wall Street had expected. Food retailer Sysco rose 6.1% after beating analysts’ forecasts.

Migraine treatment developer Biohaven Pharmaceutical jumped 68.4% after Pfizer announced it would buy the company for $11.6 billion. Pfizer already owns part of the business.

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Veiga reported from Los Angeles.

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