NEW YORK - The stock market broke a three-day losing streak Tuesday, pushing the Standard & Poor’s 500 index back into positive territory for the year.
The rebound was driven partly by bargain-hunting as investors picked up stocks that had fallen the most in the slump over the previous three trading days. Utilities stocks also rose sharply as skittish investors bought less-volatile stocks.
“Longer-term investors should really use this as an opportunity to buy attractive areas that have sold off,” said Kristina Hooper, US Investment Strategist at Allianz Global Investors. “For them, stocks are on sale.”
The S&P 500 rose 6.92 points, or 0.4 percent, to 1,851.96. The Dow Jones industrial average climbed 10.27 points, or 0.06 percent, to 16,256.14. The Nasdaq composite rose 33.23 points, or 0.8 percent, to 4,112.99.
Stocks have had a volatile start to April. After closing at a record last Wednesday amid optimism about the improving outlook for the economy, stocks fell sharply Friday as investors decided that some of the high-flying stocks in the technology and biotech sectors no longer justified their lofty valuations.
Even as investors sent stocks higher, they were still being cautious. Investors typically buy utilities stocks when they are worried about volatility in the market. That’s because those companies pay big dividends and demand for the power they generate tends to be stable, regardless of how the economy is doing.
On Tuesday, the utilities sector rose 1.5 percent. The sector has gained 10.5 percent this year, making it by far the best-performing industry group in the S&P 500. Healthcare stocks are the next best performers, gaining 2.7 percent over the same period.
Technology stocks and consumer discretionary stocks, among the biggest decliners in the three-day sell off, also logged gains Tuesday.
Facebook rose $1.24, or 2.2 percent, to $58.19. Google’s newly issued Class C shares rose $16.75, or 3.1 percent, to $554.90.
The recent volatility is making it tough for investors who are looking to get back into stocks after switching their investments to cash and bonds in the aftermath of the financial crisis and the recession, said Mike Mussio, a managing director with FBB Capital Partners, a wealth management company.
“It is a little nerve-wracking for people entering the market just now, with cash they’ve had on the sidelines,” said Mussio.
Corporations start reporting first-quarter earnings this week, which should help stabilize the market, said Joe Quinlan, chief market strategist at U.S. Trust. Quinlan attributed the stock market’s recent wobble to investors’ jitters ahead of corporate earnings.
Overall, corporate earnings are forecast to grow just 0.2 percent in the first quarter compared with the same period a year ago, according to S&P Capital IQ. That would be the weakest showing since the third quarter of 2009, when earnings contracted 1.7 percent.
“Seems like every time we come up to earnings season we get a little nervous,” Quinlan said. “This will pass.”
Business, Pages 26 on 04/09/2014