NEW YORK (AFP) - Wall Street finished sharply higher on Monday (Feb 26) for the second day in a row as stocks continued to move back toward January’s peak levels.
Tech stocks posted the strongest gains as investors showed little sign of the inflation fears which sparked a correction early this month.
The benchmark Dow Jones Industrial Average gained nearly 400 points or 1.6 per cent, to close at 25,709.27, while the broader S&P 500 rose 1.2 per cent to finish at 2,779.60 – putting both indexes at their highest level this month.
The tech-heavy Nasdaq also added 1.2 per cent to close at 7,421.46, its highest level since late January.
The increases meant the Dow and S&P have regained more than half the losses sustained during early February’s selloff.
“When there is a rally, the sector that moves the most is technology,” Art Hogan of Wunderlich Securities told AFP, noting that major tech stocks like Amazon, Netflix, Apple, Google-parent Alphabet and Facebook already have returned to pre-correction levels.
Cisco Systems and 3M both gained three percent or more, leading the Dow higher, while chip-maker Intel shot up 2.9 per cent.
The January employment report released earlier this month showing a jump in wages sent stocks tumbling 10 per cent on fears of inflation and a quickening pace of interest rate increases.
Since then, however, investors have regained their footing and the Federal Reserve has calmed fears it may move more quickly to counteract inflation.
Investors also were heartened Monday as Fed Governor Randal Quarles endorsed the economy’s robust health, saying he was “fairly optimistic” about the outlook, and raised no red flags about inflation.
Investors will be watching Tuesday as newly-installed Fed Chairman Jerome Powell makes his first appearance before Congress as central bank chief.
“His tone will be in the middle,” Hogan said.
“The Fed would like to hike rates three times this year. I don’t think that consensus will change after hearing from him.” Powell will face questioning on Capitol Hill again on Thursday in the second part of the semi-annual testimony.
Closely watched government data on inflation and GDP growth also are due out this week.