Wall Street up ahead of Fed meeting as tech buying punctuates volatile trade

  • Activision up after Berkshire Hathaway reveals 9.5% stake
  • Spirit Airlines slumps as board rejects JetBlue takeover bid
  • Yield on 10-year US Treasuries hits 3% for first time since 2018
  • Tech names are hosting a late afternoon rally
  • Indices gain: Dow 0.26%, S&P 0.57%, Nasdaq 1.63%

May 2 (Reuters) – Wall Street’s major indexes closed a sawtooth session higher on Monday as investors bought tech names in the last hour of trading amid bets they had been too beaten before the Federal Reserve meeting this week.

The rally of U.S. central bank policymakers is widely expected to raise interest rates by half a percentage point, with this week’s move set to kick off a period of aggressive rate hikes to counter the inflation.

The nervousness ahead of the meeting was reflected in a topsy-turvy session for US equities. After positive moves to start the day, the S&P 500 fell to its lowest intraday point since May 2021, and the Nasdaq touched a level last seen in November 2020.

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Jitters were also seen in the US Treasuries market, where the benchmark 10-year index crossed the 3% mark for the first time in more than three years.

In addition to positioning themselves for the expected rate hike, traders were also eyeing the launch of “quantitative tightening,” where the central bank shrinks its balance sheet after buying bonds to support the economy during the pandemic. Read more

However, earlier declines were used as a buying opportunity by some in the latter part of the session to drag all three indices into positive territory.

“We are now at a point in the market where a large chunk, across various sectors, is battered,” said Sylvia Jablonski, chief investment officer of Defiance ETF.

“I think the market has assessed what the Fed will be able to do, so my feeling – as someone who likes to look for long-term opportunities – is that this is the land of opportunity right now.”

Jablonski pointed to the names of megacap technology, which will remain key parts of the economy for years to come, as being “on sale.”

High-growth stocks such as technology have been battered this year as traders adjust to the higher interest rate environment, with losses accentuated in recent days by a number of disappointing earnings reports .

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., April 14, 2022. REUTERS/Brendan McDermid

However, Facebook parent company Meta Platforms Inc (FB.O) climbed 5.3% on Monday after falling 9.8% last month. Nvidia Corp (NVDA.O) also jumped 5.3%, while Microsoft Corp (MSFT.O) gained 2.5%, following steep declines in April.

After spending much of the day in the red, Tesla Inc (TSLA.O), Amazon.com Inc (AMZN.O) and Apple Inc (AAPL.O) all ended between 0.2% and 3.7 % moreover.

Apple was weighed down for much of Monday as the iPhone maker faced a hefty fine after EU antitrust regulators accused it of restricting rivals’ access to its technology used to mobile wallets. Read more

The Dow Jones Industrial Average (.DJI) rose 84.29 points, or 0.26%, to 33,061.5, the S&P 500 (.SPX) gained 23.45 points, or 0.57%, to 4,155.38 and the Nasdaq Composite (.IXIC) added 201.38 points, or 1.63%, to 12,536.02.

Among the 11 S&P sectors, communication services (.SPLRCL) was the biggest gainer of the six indexes that gained. Real estate (.SPLRCR) led the declines.

Pfizer Inc (PFE.N) fell 1.5% after a large trial found its oral COVID-19 antiviral treatment Paxlovid was not effective in preventing coronavirus infections in people living with an infected person by the virus. Read more

Activision Blizzard (ATVI.O) climbed 3.3% after Warren Buffett said Berkshire Hathaway Inc (BRKa.N) took a 9.5% stake in games maker “Call of Duty”. Read more

Spirit Airlines (SAVE.N) fell 9.4% after the ultra-low-cost carrier rejected a $33-per-share buyout offer from JetBlue Airways Corp (JBLU.O), saying it had little likely to obtain approval from government regulators. Read more

By comparison, JetBlue ended up 2.6%, regaining ground lost in a midday swing that wiped out early gains.

Volume on U.S. exchanges was 13.22 billion shares, compared to an average of 11.87 billion for the full session over the past 20 trading days.

The S&P 500 posted 1 new 52-week high and 52 new lows; the Nasdaq Composite recorded 26 new highs and 503 new lows.

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Reporting by David French in New York and Devik Jain in Bengaluru Editing by Shounak Dasgupta and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

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