The bloodletting in stocks is stanched as investors buy the dip and rotate out of tech
In this news:
Key takeaways
- The equal-weight S&P 500 rose 1.36% while the tech-heavy Nasdaq remained flat.
- Federal Reserve Chair Kevin Warsh did not signal an interest rate rise.
- The S&P 500 energy sector reached a 50% gain for the year.
Much of the gains were in non-tech stocks. While the S&P 500 gained 0.33% yesterday, the tech-heavy Nasdaq was flat, and the equal-weight S&P was up a solid 1.36%. “378 names in the S&P 500 were higher on the day,” Deutsche Bank’s Jim Reid noted. The index remains within 1% of its record high.
“The selling in tech has been stopped in its tracks, while the rotation into other sectors continues. Tech stocks aren’t out of the woods yet, but rotation of this kind is just what investors need to see, even if it is a deeply painful experience for tech fans,” Chris Beauchamp, the chief market analyst at trading platform IG told Fortune in an email.
Words from Warsh did not sound harsh
Investors also listened closely to Fed Chair Kevin Warsh’s speech at the IMF—and they liked what they didn’t hear. He did not signal an interest rate rise in October. CME FedWatch futures are now showing an 85% expectation that the Fed will hold rates later this month. (Stock investors generally like it when central banks don’t increase interest rates because it means borrowing costs will remain stable.)
“With Federal Reserve Chair Warsh refusing to give forward guidance on policy at the IMF meetings—then giving forward guidance of a sort. Warsh failed to sound hawkish,” USB’s Paul Donovan told clients this morning. “The word of Warsh carries relatively little weight, but this chimes with Fed President William’s earlier remarks. Expectations for an October rate increase are fading.”
S&P 500 futures were up 0.42% this morning. The index rose 0.33% yesterday.
In Europe, the Stoxx 600 was up 0.46% in early trading, and the U.K.’s FTSE 100 was flat before lunch.
Asia: South Korea’s KOSPI was up 2.05%. Japan’s Nikkei 225 was up 1.39%. India’s Nifty 50 was up 0.36%. China’s CSI 300 was up 0.11%.
Brent crude was at $105 per barrel.
Bitcoin was at $82,101.
Energy stocks hit a 50% gain for the year
Stocks in the S&P 500’s energy sector—buoyed by demand from AI data centers and the rising price of oil—are up 50% year-to-date, per the Bespoke Investment Group, the first of the index’s official sectors to hit that mark. This year’s rally ranks fifth among all 50% sector gainers since 1990, the group said:
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