Traders work on the floor of the New York Stock Exchange during morning trading on August 06, 2024 in New York City.
Michael M. Santiago | Getty Images
Stocks jumped Tuesday, recovering some some losses from the previous trading session.
The S&P 500 traded 2.1% higher. The Dow Jones Industrial Average rose 607 points, or 1.6%, and the tech-heavy Nasdaq Composite gained 2.2%.
All eleven sectors of the broad market index were positive for the day, with tech up nearly 2%. Several megacap tech stocks also rebounded after a sharp pullback on Monday. Nvidia rose 6%, while Meta Platforms advanced more than 5%.
Helping sentiment was a rebound in Japanese stocks. The Nikkei 225 posted its best day since October 2008, soaring 10.2%. That surge comes a day after the benchmark suffered its worst day since 1987, losing 12.4%.
The moves follow a sharp sell-off during Monday trading amid concerns over the state of the economy. The 30-stock Dow dropped 1,033.99 points, or 2.6%, while the S&P 500 slid 3%. Both indexes notched their worst sessions since September 2022. The Nasdaq Composite shed 3.4%.
A major unwind in the yen “carry trade” also contributed to the volatility. The Bank of Japan last week raised interest rates, contributing to a rise in the yen. That’s affected the practice of traders borrowing in the cheaper currency to purchase other global assets.
The volatility will likely remain elevated in the near term as the carry trade continues to unwind, said Ross Mayfield, investment strategist at Baird.
“I wouldn’t be surprised if there were some more pressure in the coming weeks, but I do think that the growth scare is overdone,” said Mayfield.
The labor market is still relatively healthy despite some cooling, and other economic indicators still appear robust, Mayfield added. “While I think the market volatility could continue, I’m less worried about the underlying fundamentals.”
