By Steve Rothwell
NEW YORK: Maybe the sell-off was a little overdone.
That was the sentiment on Wall Street Tuesday as the stock market broke a three-day losing streak. The gain pushed 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 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, U.S. Investment Strategist at Allianz Global Investors. “For them, stocks are on sale.”
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 on Friday as investors decided that some of the high-flying stocks in the technology and biotech sectors no longer justified their lofty valuations.
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.
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, utilities 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. Health-care 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 on Tuesday.
Facebook rose $1.24, or 2.2 percent, to $58.19. Google’s newly issued 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 Great Recession, said Mike Mussio of FBB Capital Partners.
Whole Foods Market gained $1.09, or 2.2 percent, to $51.38 after analysts at UBS raised their price target for the stock to $70 from $62.