The Dow Jones Industrial Average rose Wednesday as investors piled back into economically sensitive sectors on bets that the U.S. economy will continue to recover.
The index of blue-chip stocks added 290 points, or 0.9%, in mid-morning trading, as companies ranging from American Express to Chevron to Caterpillar gained. The S&P 500 added 0.4%, on track to recover some of the losses it endured Tuesday. The technology-heavy Nasdaq Composite, meanwhile, gave up early gains for the day, losing 0.4%.
Markets have seesawed this week as investors have continued to assess the implications of a recent climb in bond yields, which, despite edging lower this week, surpassed 1.7% this month for the first time in more than a year. Money managers are also assessing the valuations on stocks after the major indexes climbed over 70% since the pandemic-fuelled rout last March.
“We are now one year into this rally: we’ve seen a massive decline and a massive rally, and my sense is that markets are just going to pause for breath from here,” said Brian O’Reilly, head of market strategy for Mediolanum International Funds. “Gains are going to be much harder to come by for the rest of the year.”
Technology stocks have been hit particularly hard by investors’ jitters over the rise in bond yields, in part, because future earnings are worth less when bond yields rise. Companies such as Apple, Netflix and Amazon.com , which were among the stocks that led markets higher last year, have all fallen on a year-to-date basis.