Stocks surged on Tuesday as Wall Street built on a strong rally seen in the previous session.
The Dow Jones Industrial Average rose 731 points, or 2.5%. The S&P 500 gained 2.7% and the Nasdaq Composite rose 3.1%.
Tuesday’s gains sent the S&P 500 up 5.1% for the week and on track for its best two-day rally since March 2020.
The markets had a good start to the month, bringing a rest rapid declines seen in September and the previous quarter. On Monday, the Dow Jones jumped about 765 points for its best day since June 24. The S&P 500 advanced about 2.6% on its biggest day since July 27, and the Nasdaq added 2.3%.
“After falling more than 9% in September and extending its year-to-date decline to nearly 25% at Friday’s close, we believe the S&P 500 appeared to be oversold,” said Mark Haefele, chief financial officer. investments at UBS Global Wealth Management. “Additionally, some of the selling pressure in the past week may have been driven by the quarter-end rebalancing, which is now complete.”
“Sentiment towards equities is already very weak, periodic rebounds are to be expected,” he added. “But markets are likely to remain volatile in the near term, driven primarily by inflation and policy rate expectations.”
Sentiment has improved over the past two sessions as Treasury yields hit 10+ year highs. The 10-year Treasury yield traded around 3.615% on Tuesday, down from more than 4% at one point last week. Earlier in the day, it briefly dipped below 3.6%.
On Tuesday, sentiment also strengthened, with shares of Credit Suisse trading up 4%. Earlier in the week, concerns were raised about the financial health of the bank. The bank told CNBC it will provide strategy updates alongside its third-quarter numbers.
Equities extended their advance after job posting data indicating a weakening labor market, which has led some traders to bet that the Fed could undo its aggressive tightening campaign sooner than expected.