Tech Surge Powers U.S. Stocks Rally, Oil Drops 2%

Barry Adams
17 May, 2022
New York City

U.S. stocks recoiled higher on Tuesday after bargain hunters searched for stocks in tech and energy sectors. 

The S&P 500 index increased 2.03% to 4,088.85 and the Nasdaq Composite index surged 2.76% to 11,984.52. 

The stocks rebounded after weeks of losses and the teach-heavy Nasdaq index deep in bear territory. For the year, the S&P 500 index is still down 15% and the Nasdaq is down 25% after dropping as much as 28% two weeks ago. 

Airlines traded higher after United revised higher its second quarter outlook and said more passengers are flying and paying more than previously estimated. 

United Airlines jumped 7.8% to $46.95, Delta Air gained 6.5% to $40.68, and Southwest Airlines increased 4.4% to $45.06. American Airlines Group jumped 7.7% to $17.83.

Futures of crude oil declined 2% to $111.97 a barrel and the yield on 10-year U.S. Treasury notes edged higher to 2.988%.  

Citigroup and Paramount Global gained after Warren Buffet controlled Berkshire Hathaway reported stakes in the companies. 

On the economic front, the advance estimate of retail and food services sales adjusted for seasonal factors but not adjusted for price increased 0.9% in April from the previous month and jumped 8.2% from April 2021.

 The data released by the U.S. Census Bureau showed grocery store sales declined 0.1% in April from the previous month but rose 8.1% from a year ago.

However the latest earnings from Home Depot and Walmart presented two contrasting snapshots of the economy. 

Walmart sales struggled reflecting the struggles of its customer base and the retail giant also suffered from supply chain disruptions and customer shifting to basic food purchases and trimming down on the higher margin apparel and electronics. 

Walmart declined 11.4% to $131.35. 

Home Depot reported stronger sales in the later quarter and lifted outlook for the full-year but also reported a decline in number of transactions. 

Home Depot Inc rose 1.7% to $300.95. 

Investors also noted recent comments from the Federal Chairman Jerome Powell during a Wall Street Journal conference. 

Powell stressed that the central bank is committed to fighting inflation and ready to act to bring the "financial conditions are in appropriate place, we see inflation coming down."

European markets traded higher after bargain hunters revved up buying in large and mid cap stocks. 

The DAX index gained 1.5% to 14,185.12, the CAC-40 index advanced 1.3% to 6,430.19, and the FTSE 100 index gained 0.7% to 7,518.36. 

Investors cheered the latest jobs reports from France and the U.K. 

French unemployment rate in the first quarter declined to 7.3%, the lowest in 14 years and the U.K. jobless rate fell to 3.7% in the period, the lowest since 1974. 

Eurozone growth in the first quarter increased 0.3% from the previous quarter matching rate in the fourth quarter, according to the data released by the Eurostat. 

Asian markets advanced after China authorities suggested Covid-19 restrictions may be eased as early as June. 

The Nikkei 225 index in Tokyo increased 0.4% to 26,695.75, the Hang Seng Index in Hong Kong advanced 3.3% to 20,602.52, and the ASX 200 index in Sydney added 0.3% to 7,112.50. 

The Sensex index gained 2.54% or 1,344.63 to 54,318 and the Nifty index advanced 2.6% or 417.00 to 16,259.50.