Stocks on Wall Street traded higher on Tuesday, a partial rebound from a steep drop Monday over Italian election results, as investors saw opportunities to buy beaten-down shares.
The Standard & Poor’s 500-stock index jumped 0.7 percent in early trading. The Dow Jones industrial average added 0.9 percent, more than 120 points, and the Nasdaq composite index rose 0.4 percent.
The major indexes fell more than 1 percent on Monday, with the S.&P. 500 having its biggest daily drop since November as investors fretted that if Italy does not undertake reforms, the euro zone could once again be destabilized. European equities were off more than 1 percent in afternoon trading Tuesday.
Groups in Italy opposed to economic reforms posted a strong showing in the recent election, resulting in a political deadlock with a comedian’s protest party leading the poll and no group securing a clear majority in parliament.
“We’ve gone to an environment of political stability to instability, and until we get some type of clarity over who is in charge, which could take days, the market will have renewed concerns,” said Art Hogan, managing director of Lazard Capital Markets in New York.
Still, market participants speculated a coalition government would eventually emerge in Italy and ease worries about a new euro zone crisis.
The early market gaines suggested the recent trend of investors buying on dips would continue. Last week, concerns the Fed might roll back its stimulus efforts earlier than expected prompted a sharp two-day decline, though equities recovered most of the lost ground by the end of the week.
“Investors are taking advantage of the drop, and once some kind of coalition government is formed, most of our concerns will be put to rest,” Mr. Hogan said.
Home Depot reported adjusted earnings and sales that beat expectations, sending shares up 2.6 percent.
Macy’s rose 3.8 percent after stating it expects full-year earnings to be above analysts’ forecasts because of strong sales in the holiday period.
For the benchmark S.&P. 500, 1,500 will be watched as a key level after the index closed below it on Monday for the first time since Feb. 4, with selling accelerating after falling below it. An inability to break back above it could portend further losses.
Financial shares may be among the most volatile, as the group is closely tied to the pace of global economic growth. Morgan Stanley was one of the top percentage losers on the S.&P. on Monday, dropping more than 6 percent on concerns about the company’s exposure to European debt. It rose 0.8 percent on Tuesday.
Wall Street Stages Partial Rebound
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Wall Street Stages Partial Rebound
