U.S. Stocks Show Substantial Turnaround After Seeing Early Weakness

After extending yesterday’s sell-off early in the session, stocks have shown a substantial turnaround over the course of the trading day on Tuesday. The major averages have bounced well off their worst levels of the day and into positive territory.

The major averages have seen further upside in recent trading, reaching new highs for the session. The Dow is up 553.14 points or 1.7 percent at 33,370.52, the Nasdaq is up 309.61 points or 2.4 percent at 13,140.58 and the S&P 500 is up 70.00 points or 1.7 percent at 4,271.09.

The rebound on Wall Street may be partly due to bargain hunting, as traders pick up stocks at reduced levels following the steep drop seen on Monday.

The Nasdaq ended Monday’s session at its lowest closing level in a year, while the Dow and the S&P 500 dropped to eleven and eight-month closing lows, respectively.

A pullback by the price of crude oil may also have contributed to the turnaround by stocks, as crude for April delivery remains up by $2.50 at $121.90 a barrel but is well off its high of $129.44 a barrel.

Crude oil prices have given back ground even though President Joe Biden has officially announced a U.S. ban on the import of Russian oil, liquefied natural gas, and coal.

“We’re banning all imports of Russian oil and gas and energy,” Biden said. “That means Russian oil will no longer be acceptable at U.S. ports and the American people will deal another powerful blow to Putin’s war machine.”

The European Union has also revealed plans to reduce its dependence on Russia, with the bloc’s executive arm the European Commission pledging to reduce Russian gas imports by two-thirds by the end of this year.

Sector News

Airline stocks have moved sharply higher over the course of the session, with the NYSE Arca Airline Index soaring by 9.5 percent after ending the previous session at its lowest closing level in well over a year.

Substantial strength has also emerged among semiconductor stocks, as reflected by the 5 percent spike by the Philadelphia Semiconductor Index.

Banking stocks have also shown a significant move to the upside along with treasury yields, driving the KBW Bank Index up by 3.4 percent.

Housing, oil service and biotechnology stocks are also seeing considerable strength in afternoon trading, while some weakness remains visible among steel stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region saw continued weakness during trading on Tuesday. Japan’s Nikkei 225 Index slumped by 1.7 percent, while China’s Shanghai Composite Index plunged by 2.4 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.’s FTSE 100 Index inched by 0.1 percent, the German DAX Index closed just below the unchanged line and the French CAC 40 Index fell by 0.3 percent.

In the bond market, treasuries have moved sharply lower amid concerns about higher inflation. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 11.7 basis points at 1.868 percent.

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