Wall Street posts solid gains as defensives and technology shine

  • Energy and cyclical sectors are lagging behind
  • Lower bond yields support technology and growth stocks
  • U.S. economic activity slows significantly in June survey
  • Indices up: Dow 0.64%, S&P 0.95%, Nasdaq 1.62%

June 23 (Reuters) – Wall Street’s major indexes posted solid gains on Thursday, fueled by strong performance in defensive and technology stocks that offset declines in economically sensitive groups as concerns lingered over a possible recession.

The benchmark S&P 500 index swung between positive and negative during the session, but stocks gained momentum as the market neared close. Benchmark U.S. Treasury yields fell to two-week lows, supporting technology and other rate-sensitive growth stocks.

Trading remained volatile in the wake of the S&P 500 last week, posting its biggest weekly percentage decline since March 2020. Investors are pricing in how far stocks could fall after the index at the start of the month fell more down 20% from its all-time high in January, confirming the common definition of a bear market.

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“There is huge uncertainty about the outlook and so the market is confused,” said Walter Todd, chief investment officer at Greenwood Capital in South Carolina.

The Dow Jones Industrial Average (.DJI) rose 194.23 points, or 0.64%, to 30,677.36, the S&P 500 (.SPX) gained 35.84 points, or 0.95%, to 3,795.73 and the Nasdaq Composite (.IXIC) added 179.11 points, or 1.62%, to 11,232.19.

In his second day of testimony before Congress, U.S. central bank chief Jerome Powell said the Fed’s commitment to containing inflation at a 40-year high was “unconditional,” but also came with the risk of rising unemployment. Read more

Business activity in the United States slowed significantly in June as high inflation and falling consumer confidence dampened demand across the board, a survey showed on Thursday.

“The Fed wants to see things start to slow down and the data is starting to reflect that,” said James Ragan, director of wealth management research at DA Davidson.

Citigroup analysts forecast a nearly 50% chance of a global recession. Read more

“Economic growth is slowing down. Will it slow down enough to enter a recession, that’s the big question,” Ragan said.

Defensive groups seen as safer bets during turbulent economic times were the best performing sectors in the S&P 500. Among them, utilities (.SPLRCU) gained 2.4%, healthcare (.SPXHC) rose by 2.2% and real estate (.SPLRCR) gained 2%.

The heavyweight tech sector (.SPLRCT) rose 1.4%, with Microsoft (MSFT.O) up 2.3% and Apple (AAPL.O) up 2.2%.

The energy sector (.SPNY) fell 3.8%, continuing its recent decline after largely outperforming the market for most of 2022. The declines in Exxon Mobil (XOM.N) and Chevron ( CVX.N) were the biggest individual drags on the S&P 500, with Exxon down 3% and Chevron down 3.7%.

Other economically sensitive sectors also fell. Materials (.SPLRCM) lost 1.4%, while Industrials (.SPLRCI) and Financials (.SPSY) fell around 0.5% each.

Advancing issues outnumbered declining ones on the NYSE by a ratio of 1.41 to 1; on the Nasdaq, a ratio of 1.67 to 1 favored advancers.

The S&P 500 posted a new 52-week high and 40 new lows; the Nasdaq Composite recorded 32 new highs and 194 new lows.

About 12.4 billion shares changed hands on US exchanges, compared to the daily average of 12.5 billion over the past 20 sessions.

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Reporting by Lewis Krauskopf in New York, Devik Jain and Sruthi Shankar in Bengaluru and Boleslaw Lasocki in Gdansk; Editing by Arun Koyyur and Cynthia Osterman

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