By Yasin Ebrahim
Investing.com – The Dow climbed Tuesday, but ended well below session highs as investors looked ahead to an eagerly anticipated Federal Reserve decision.
The Dow Jones Industrial Average gained 0.20%, or 67 points, the Nasdaq added 0.22%, the S&P 500 gained 0.48%.
Energy was the outperforming sector despite weakness in oil prices amid ongoing concerns that Covid-19 lockdowns in China are likely to stem energy demand in the world’s second largest economy.
March crude production was still “comparatively high” in China, Commerzbank said, citing the National Bureau of Statistics. But that is likely to change in April following the impact on demand from lockdowns in China.
BP (NYSE:BP) jumped more than 8% after the oil major reported quarterly results that beat on both the top and bottom lines.
Financials, meanwhile, were also involved in the heavy lifting of the broader market, as investor sentiment in bank stocks returned following the recent surge in Treasury yields.
JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC), Citigroup (NYSE:C) were among the top gainers in the sector, with the latter up more than 2%.
“We think that the simple story that rising rates are good for banks is still very much in place, particularly the first 200-300 basis points of a rate hike cycle,” {{Oppenheimer said in a note}}.
Technology stocks, meanwhile, were boosted by a slip in Treasury yields, but investors remain wary of piling into growth corners of the market at a time when the Federal Reserve is preparing to step up the pace of monetary policy tightening.
“The sentiment around the tech space right now is so poor and so hinged to rates (Treasury yields) that even when rates come down, tech stocks don't considerably outperform,” David Wagner, portfolio manager at Aptus Capital Advisors told Investing.com in an interview on Tuesday.
The Fed is expected to raise rates by 50 basis points on Wednesday for the first time in more than two decades to combat stubbornly high inflation, paving the way for Treasury yields to continue their climb higher after the 10-year briefly topped 3%.
"It's still pretty clear that interest rates are still incredibly low relative to the long-term mean ... they're just barely starting to break above trend lines, looking at the deep history back to the 1980s, or any sort of interest rate history," Chief Market Strategist David Keller at StockCharts told Investing.com in an interview on Tuesday.
On the earnings front, Pfizer (NYSE:PFE) and Expedia (NASDAQ:EXPE) garnered the bulk of the investor attention.
Pfizer closed up more than 1% as better-than-expected first-quarter revenue and earnings helped offset softer guidance on the company’s Covid-19 paxlovid.
Expedia slid 14% after travel booking company reported mixed quarterly results and expectations that most of the upside from a rebound in travel demand are priced in.
“The company remains well positioned to benefit as developed market travel rebounds, however, we continue to believe both a strong recovery as well as future margin expansion is fairly baked into shares,” RBC said in a note.