Major U.S. stock indexes closed mostly higher Tuesday, erasing much of an early slide, as investors favored smaller, U.S.-focused companies for the second straight day.
Industrial, energy and health care stocks helped power the market higher. Banks also notched solid gains amid a broad pullback in demand for U.S. government bonds, which pushed yields higher. The yield on the 10-year Treasury note climbed to 1.73% from 1.62% late Monday, a big move.
Lenders rely on higher yields to set more lucrative interest rates on loans. Bank of America rose 2.5%, Goldman Sachs gained 1.7% and State Street vaulted 9%.
For the second day in a row, traders unloaded technology stocks and shares in companies that rely on consumer spending. Microsoft dropped 1.1%, as did payment processors Visa and Mastercard, losing 2.8% and 3.9%, respectively.
“It seems like a complete reversal of what’s kind of been the theme over the last few months, where it’s been more about higher quality, higher market cap, higher growth, more stable growth and lower volatility,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. “Things that had been doing well just completely got sold and the things that had been lagging completely got bought.”
The S&P 500 index inched up 0.96 points, or less than 0.1%, to 2,979.39. The Dow Jones Industrial Average rose 73.92 points, or 0.3%, to 26,909.43. The average was briefly down 118 points.
The Nasdaq, which is heavily weighted with technology stocks, slid 3.28 points, or less than 0.1%, to 8,084.16.
Investors continued to flock to smaller-company stocks. They’re seen as being better shielded from the fallout of the costly trade war between the U.S. and China than large multinationals.
Among the small-cap gainers were ABM Industries, which rose 3.1% and Spectrum Pharmaceuticals, which jumped 16.9%.
The Russell 2000 index of smaller-company stocks led the gainers, adding 18.76 points, or 1.2%, to 1,542.99.
The broader market has been gaining ground for two weeks as investors remain confident in the strength of the economy, despite the lingering trade war between the U.S. and China. The feud between the world’s two largest economies has been injecting doses of volatility into the market as both sides escalate and then pull back. Recent plans for trade talks to resume in October raised some hope on Wall Street for a resolution.
Meanwhile, investors continue to watch the steady flow of economic data for a clearer picture of the U.S. economy’s health. Recent reports have been a mixed bag, including a Labor Department report Tuesday that showed both a slip in job openings as well as a slight increase in hiring in July.
The Labor Department will report the latest consumer price index figures on Thursday and the Commerce Department will report August retail sales data on Friday. Economists continue to expect the Federal Reserve to cut interest rates at its meeting next week to help maintain U.S. economic growth.
Apple rose 1.2% after announcing a new slate of iPhones and other products, including a $5 a month streaming video service, which would be cheaper than rival offerings. Netflix and Disney each fell 2.2%.
Traders knocked Wendy’s shares 10.5% lower after the fast-food chain cut its profit growth forecast because of plans to expand its breakfast options nationwide. The company plans to invest $20 million this year in the expansion and expects up to 6.5% profit growth instead of 7% growth.
Ford dropped 1.3% after Moody’s cut the automaker’s credit rating to “junk.” Moody’s is concerned that the company will be weighed down by weak earnings as it restructures. The move by Moody’s makes it more costly for Ford to borrow money.
A mix of consumer product makers and consumer-focused stocks also fell Tuesday. Procter & Gamble dropped 1.9% and McDonald’s slid 3.5%.
Energy and industrial companies notched solid gains. Schlumberger rose 3.4% and Deere & Co., rose 3.6%.
Benchmark crude oil fell 45 cents to settle at $57.40 a barrel. Brent crude oil, the international standard, slipped 21 cents to close at $62.38 a barrel. Wholesale gasoline rose 1 cent to $1.59 per gallon. Heating oil was unchanged at $1.93 per gallon. Natural gas fell 1 cent to $2.58 per 1,000 cubic feet.
Gold fell $11.90 to $1,490.30 per ounce, silver rose 2 cents to $18.04 per ounce and copper was unchanged at $2.61 per pound.
The dollar rose to 107.43 Japanese yen from 107.16 yen on Monday. The euro weakened to $1.1047 from $1.1052.