Stock markets rally after global rout

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Traders work on the floor of the New York Stock Exchange during afternoon trading on August 5.

Stocks rallied Tuesday, bouncing from widespread losses on Wall Street the prior day.

The Dow rose 294 points, or 0.8%, after surging more than 700 points at session highs. The S&P 500 gained 1% and the Nasdaq Composite also added 1%.

All 11 sectors of the benchmark index rose Tuesday, led by real estate, financials and communication services.

The market’s gains weren’t enough to recover all of its losses from earlier this week, when the Dow and S&P 500 notched their worst day since 2022 after weak labor data spurred fears of a US economic recession.

Still, the mood on Wall Street appeared much improved Tuesday. The Cboe Volatility Index, or VIX, which measures bets on expected stock market volatility, tumbled to 26.

CNN’s Fear & Greed Index, which measures seven barometers of market sentiment, remained at an “extreme fear” reading but rose to 23 from 19 on Monday.

Oil prices rallied. West Texas Intermediate crude futures, the US benchmark, settled higher at roughly $73.20 a barrel. Brent crude futures, the international benchmark, edged up to settle at $76.48 a barrel.

As stocks settle after the trading day, levels might change slightly.

Tuesday’s powerful stock rally lost some momentum with less than an hour to go before the close.

The Dow rose 477 points, or 1.2%, after surging more than 700 points at its highs. The S&P 500 gained 1.6% and the Nasdaq Composite added 1.6%.

Small-cap stocks are on the rise again.

The Russell 2000 index, which tracks the performance of US small-cap stocks, rose 2.3% Tuesday afternoon.

The index tumbled 3.3% during Monday’s session, underperforming the S&P 500’s steep decline.

Small caps had seen a boost in recent weeks as investors turned their attention to areas of the market beaten down by sky-high interest rates, betting that the Fed would soon cut rates.

But the dismal July jobs report on Friday fueled recession worries and spurred a broad, global stock selloff.

Traders work on the floor of the New York Stock Exchange on Tuesday, August 6.

US stocks rebounded powerfully Tuesday mid-afternoon.

The Dow leapt 717 points, or 1.9%. The S&P 500 gained 2.4% and the Nasdaq Composite climbed 2.5%.

All 11 sectors of the S&P 500 were positive, led by real estate, information technology and industrials.

Shares of tech heavyweights popped. Nvidia shares were up 6.8% and Meta Platforms added 5.6%.

People walk along Wall Street outside of the New York Stock Exchange on August 5.

Investors were in a much better mood Tuesday than the beginning of the week.

The VIX, known as Wall Street’s fear gauge, tumbled to about 24 on Tuesday afternoon. The measure had spiked above 65 at one point on Monday as traders feared a potential US economic downturn.

Still, that doesn’t mean investors are worry-free. The VIX’s current level is hovering around the same levels at which it was trading Friday, when the weak July jobs report began sending stocks lower before culminating in the global markets rout on Monday.

CNN’s Fear & Greed index rose but remained in “extreme fear” territory.

Oil pump jacks are shown in a field on June 27 in Stanton, Texas. 

Oil prices ticked higher Tuesday mid-afternoon.

West Texas Intermediate crude futures, the US benchmark for oil, rose 0.8% to $73.48 a barrel. Brent crude futures, the international benchmark, gained 0.4% to $75.92 a barrel.

That comes after crude futures fell the prior day on worries about a US economic slowdown and concerns about weak Chinese demand.

Crude prices have been falling recently as fears grow that a recession could hurt demand for travel and other fuel needs. Although a recession in the US seems far off, America’s fast-rising unemployment rate is worrying investors.

Those factors have more than outweighed concerns about rising tension in the Middle East.

Oil could hover around current eight-month lows for a while, despite those threats of a wider conflict in the Middle East, according to Tom Kloza, global head of energy analysis at Oil Price Information Service.

“Beginning with the Hamas action last October 7, we are seeing mostly apathy when it comes to fears about a wider regional war in the Middle East,” he said.

Traders work on the floor of the New York Stock Exchange during morning trading on August 6.

Stocks built upon their gains Tuesday as investors attempted to recover from Monday’s tough losses.

The Dow rose 625 points, or 1.6%. The S&P 500 gained 2.2% and the Nasdaq Composite added 2.3%.

“Volatility can cut both ways, and it’s not unlikely we get a massive rally that undoes a lot of the damage we’ve had in the last few days,” wrote Ben Kirby, co-head of investments at Thornburg Investment Management, in a Tuesday note.

Still, he cautioned that it could be difficult for the market to sustain its gains over the long-term.

“Without positive catalysts, the momentum of the economy and risk assets is likely lower,” Kirby said.

The New York Stock Exchange is seen during afternoon trading on August 5.

The stock market’s gains continued to accelerate Tuesday midday.

The Dow climbed 562 points, or 1.5%. The S&P 500 gained 2.1% and the Nasdaq Composite added 2.2%.

Cryptocurrencies bounced Tuesday midday after a harrowing Monday.

The price of bitcoin rose 5.2% to $56,905 a coin. That comes after the cryptocurrency dipped below the $50,000 level on Monday as fears about a US economic downturn roiled markets.

Crypto-related stocks gained. Shares of Marathon Digital Holdings rose 2%, Coinbase Global shares gained 3.3% and Robinhood Markets shares added 5%.

In an aerial view, people gather near the Meta headquarters sign, in Menlo Park, California, in July 2023.

Tech stocks began recovering somewhat Tuesday after suffering bruising losses on Monday.

The S&P 500’s information technology sector rose 2.3%. The communication services sector gained 1.8%.

Shares of artificial intelligence chipmaker Nvidia added 5.7%. Meta Platforms shares rose 5%, Tesla shares gained 0.6% and Microsoft shares climbed 2.2%.

Apple shares were 0.1% lower, extending their declines after after Warren Buffett’s Berkshire Hathaway revealed on Saturday that it had sold nearly 50% of its stake in Apple.

Shares of Alphabet, whose Google search business was deemed a monopoly on Monday, gained 0.1%.

The above stocks, dubbed the Magnificent Seven for their market leadership over the past roughly year and a half, shed $615.6 billion in value on Monday, according to S&P Global data.

Read more about tech’s rough week here.

Stocks jumped Tuesday as Wall Street attempted to recover from Monday’s market carnage.

The Dow rose 431 points, or 1.1%. The S&P 500 gained 1.7% and the Nasdaq Composite added 1.7%.

The mood on Wall Street also appeared to improve. The Cboe Volatility Index, or VIX, which measures investors’ expectations for stock market volatility, fell to 27 from Monday’s level of more than 60.

CNN’s Fear & Greed Index stayed in the “extreme fear” territory but ticked higher to 21 from its prior closing level of 19.

A dramatically bad day for stocks is no reason to take dramatic action with your 401(k).

For individual investors, the quick-turn global rout in stocks on Monday was unsettling, even with news Tuesday that there is somewhat of a bounce-back going on.

Expectations that volatility will continue for the foreseeable future may be unwelcome.

But if you’re investing in a 401(k), daily market dramas are no reason to take dramatic actions with your portfolio. Not only are down days and periods of volatility normal, they can create good buying opportunities for the managers of the funds in which you’re invested. “It’s important to remember pockets of opportunity are always on the other side of the storm,” Quincy Krosby, chief global strategist at LPL Financial, said in a statement.

Andy Smith, executive director of financial planning at Edelman Financial Engines, puts it this way: “Separate your emotion from your money. There will be days when the market is up and days when it’s down. Focus on your time in the market rather than trying to time the market.”

His point: It’s impossible to know the best time to get out of the market and then the best time to get back in.

As a 401(k) investor, the best thing you can do is to save as much as you can, diversify your holdings to minimize the risk and volatility in your portfolio, and rebalance your holdings if your chosen asset allocation gets too far out of whack, Smith said.

Checking to see if you need to rebalance your portfolio is something you should do at least once a year anyway – but many of us never do.

Say you set up a portfolio of 70% stocks and 30% bonds but now it’s morphed into a 60/40 portfolio. If 70/30 is still the right allocation given your goals and time horizon, you can direct your 401(k) administrator through your plan’s online portal to rebalance your holdings accordingly.

And remind yourself periodically that even bear markets have not stopped the long-term increases in stocks over time. For example, the S&P 500 has risen more than 80% from August 5, 2019 through yesterday. And since 1960 there have been far more positive annual S&P 500 returns than negative ones, Smith said.

The stock rally petered out somewhat Tuesday midday.

The Dow rose 234 points, or 0.7%, after jumping more than 500 points at the session’s highs. The S&P 500 gained 1.1% and the Nasdaq Composite added 1%.

U.S. Federal Reserve Chair Jerome Powell holds a press conference following a two-day meeting of the Federal Open Market Committee on interest rate policy in Washington on July 31.

The Federal Reserve is really good at not listening to you. Or anyone, really.

Panic and despair on Wall Street over the slowing US economy and the Fed’s lack of action on rate cuts have led some economists and investors to call on the Fed to take extraordinary and emergency action and cut rates before its next scheduled meeting in September.

That’s not going to happen.

The Fed has and must set policy based on data — and not emotion or market sentiment. It was set up to be free of political influence: The Fed functions as an independent governing body. Otherwise, it could act on political whims or volatile markets and make the economy worse, not better.

“We follow the many commentators who bless us with their commentary, but we don’t change anything in our approach,” Fed Chair Jerome Powell said last week at a press conference.

Markets are a signal the Fed looks at — but it’s looking at financial markets more for signs of instability and risk, not a few bad days because traders placed some bad bets.

“The Fed worries about systemic risk in financial markets, not disappointed investors,” wrote David Donabedian, chief investment officer of CIBC Private Wealth, in a note to clients. “Corrections happen. Even in the best of times, stock prices do not go up in a straight line. Setbacks are part of the process.”

And, as if on cue, the markets bounced back Monday.

“Be careful what you wish for,” said Gordon Johnson of GLJ Research, in a note to clients last week. He cautioned that if the Fed acquiesces to “market cry babies addicted to Fed stimulus,” it would devalue the dollar and wind up hurting markets even more.

Traders work on the floor of the New York Stock Exchange during morning trading on August 6.

The stock rally on Tuesday gained steam mid-morning as investors attempted to come back from Monday’s steep losses.

The Dow popped 433 points, or 1.1%. The S&P 500 gained 1.3% and the Nasdaq Composite added 1%.

CNN’s Fear & Greed index edged higher, though it remained in “extreme fear” territory.

American households are adding even more debt as high interest rates continue to stress borrowers.

Last quarter they added $109 billion more in debt, bringing the total amount of debt Americans are shouldering to $17.8 trillion, according to data released Tuesday morning by the New York Federal Reserve. That’s a new record level of debt since the regional Fed bank began tracking household debt in 2003.

The majority of last quarter’s uptick in household debt came from a $77 billion increase in mortgage balances. Another $27 billion came from the increase in credit card debt.

The Dow turned positive Tuesday morning shortly after the open.

The Dow rose 307 points, or 0.8%. The S&P 500 gained 0.9% and the Nasdaq Composite added 0.6%.

Traders work on the floor of the New York Stock Exchange during afternoon trading on August 5.

Stocks were mixed Tuesday morning as investors attempted to recover from a painful start to the week.

The Dow fell 42 points, or 0.1%. The S&P 500 gained 0.4% and the Nasdaq Composite added 0.5%.

That comes after a terrible day for Wall Street that saw a broad stock selloff, losses in crypto and oil and technical problems on trading platforms.

The Dow and the S&P 500 on Monday notched their worst daily percentage declines since 2022 after Friday’s weak July jobs report spurred fears that the US economy is on unstable footing. The Dow cratered more than 1,000 points, the 15th instance ever it has done so.

CNN’s Fear & Greed Index, which measures seven barometers of market sentiment, was at an “extreme fear” reading Tuesday morning.

The Cboe Volatility Index, or VIX, which measures bets on expected stock market volatility, fell to 32. The index surged to more than 65 at its highs on Monday.

Japan’s benchmark Nikkei 225 index finished 10% higher Tuesday, clawing back some of its historic losses from the previous day.

Oil prices continued to tick lower. West Texas Intermediate crude futures, the US benchmark for oil, fell 0.8%, to $72.38 a barrel. Brent crude futures, the international benchmark, slipped 0.7%, to $75.75 a barrel.

People walk past the Apple store in the Americana at Brand shopping center on December 26, 2023 in Glendale, California. 

Apple is holding on to its $3 trillion market capitalization crown.

The iPhone maker is the only Big Tech company with a market valuation above $3 trillion, with a value of $3.2 trillion, according to Bespoke Investment Group.

Microsoft’s and Nvidia’s values have tumbled below that level, with their market caps now at about $2.9 trillion and $2.5 trillion, respectively.

The three stocks have collectively shed roughly $1.5 trillion in value since the S&P 500 index peaked on July 16, according to Bespoke.

Tech stocks saw bruising losses in July, when investors began high-flying shares in favor of smaller stocks that had been pummeled by the Federal Reserve’s interest rate hikes. This shuffle came after a slew of cooling inflation reports raised traders’ optimism that a September rate cut is in the cards.

That slide has only snowballed after a weak July jobs report sparked a broad stock selloff.