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Stocks post 3-day winning streak as comeback continues

CNBC logo CNBC 6 days ago Fred Imbert
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Stocks ended higher Tuesday, erasing earlier losses, led by a rise in bank and tech shares.

The Dow Jones industrial average closed 39 points higher after falling as much as 180 points. Goldman Sachs and Caterpillar were the biggest contributor of gains.

The S&P 500 added 0.26 percent, with financials as the best-performing sector. Wells Fargo was the best-performing stock in the financials sector. Tech, meanwhile, rose 0.4 percent after trading lower earlier in the session.

The Nasdaq gained 0.45 percent, with shares of Nvidia, Amazon and Alphabet all rising. The tech-heavy index fell as much as 0.6 percent earlier in the session.

A recent sharp rise in interest rates has sent jitters through Wall Street, as inflation fears raised worry that the Federal Reserve will have to tighten monetary policy faster than the market expects. These worries are reflected in a Bank of America Merrill Lynch survey, which showed professional investors slashed their bond allocations to their lowest levels in 20 years.

The benchmark 10-year yield hit a four-year high on Monday. It traded slightly lower at 2.8 percent Tuesday as investors looked ahead to the release of key inflation data. The latest reading on the Consumer Price Index is scheduled for release Wednesday at 8:30 a.m. ET.

"Tomorrow will bring the most important CPI report in over 10 years, as rising inflation (which will cause higher interest rates) has become one of the biggest risks to this multi-year rally," Tom Essaye, founder of The Sevens Report, said in a note Tuesday.

Stock market volatility has roared back recently amid increasing inflation fears and the rise in interest rates. The S&P 500 has posted moves greater than 1 percent in six of the past eight trading days. For context, the broad index posted just eight 1 percent moves all of last year.

"Things are still volatile," said Jeremy Klein, chief market strategist at FBN Securities. "However, as the skittishness abates, portfolio managers will have more comfort plowing their idle capital back into stocks. Yesterday's classic 'checkmark' pattern reflected this burgeoning confidence."

In corporate news, Amazon is reportedly ramping up its medical supply business, sending shares of hospital suppliers lower. Cardinal Health, McKesson and Owens & Minor all fell at least 1.5 percent. 

Elsewhere, shares of AmerisourceBergen soared more than 8 percent after the Wall Street Journal reported that Walgreens Boots Alliance has reached out to the company about a takeover.

There are no major economic reports due Tuesday, but Cleveland Federal Reserve President Loretta Mester said the recent market rout is not impacting the central bank's economic outlook.

"While a deeper and more persistent drop in equity markets could dash confidence and lead to a pullback in risk-taking and spending, the movements we have seen are far away from this scenario," Mester said Tuesday.


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