Wall St regains some ground after big stocks rout

Wall Street’s main indexes rose in volatile trading on Tuesday, as investors looked for bargains after a rout in the previous session, while dovish rate commentary from Federal Reserve officials also lifted the mood.

Most megacap and growth stocks, which together lost $200 billion in market value on Monday, gained as Nvidia bounced back 2.3%.

Apple slipped 1.9%, extending a nearly 5% drop on Monday after Warren Buffett’s Berkshire Hathaway cut its stake in the iPhone maker by half.

Both the S&P 500 and the Nasdaq Composite posted losses of at least 3% each in the previous session after weak economic data raised worries of a U.S. recession and the unwinding of sharp positions of carry trades that fund high-yielding assets.

Wall Street plunges as US recession fears hurt risk appetite

Goldman Sachs in a note said investors typically profit when they buy after a 5% selloff in the S&P 500 index.

“We’re getting a relief rally specifically because the yen depreciated a little bit overnight and that would remove the pressure for margin calls, so the selling pressure has abated, which provides an opportunity for the market to rise with some buyers coming to the table,” said David Waddell, CEO and chief investment strategist at Waddell & Associates.

U.S. central bank policymakers pushed back on Monday against the notion that weaker-than-expected July jobs data means the economy is in recessionary freefall, but also warned that the Fed will need to cut rates to avoid such an outcome.

Traders currently see an about 75% chance of a 50-basis-point rate cut in September, down from 85% on Monday and expect the year-end rates at 4.25%-4.50%, according to CME’s FedWatch Tool.

A closely watched gap between the two- and 10-year benchmark yields turned positive on Monday, which typically indicates that the economy is heading into a downturn.

At 09:35 a.m. ET, the Dow Jones Industrial Average rose 31.52 points, or 0.08%, to 38,734.79, the S&P 500 gained 23.82 points, or 0.46%, to 5,210.15 and the Nasdaq Composite gained 79.95 points, or 0.49%, to 16,280.03.

Ten of the 11 major S&P 500 sectors were trading higher, with consumer staples and information technology leading the gains.