US stocks rallied for a second day yesterday, as investors bid up materials and energy shares on rising commodity prices and poured into beaten-down tech names after days of selling.
Stocks continued to recover from a decline that briefly took the S&P 500 into bear-market territory. That turned abruptly on Tuesday, with the S&P 500 gaining four per cent in the last hour of trading that hit short-sellers hard.
The Nasdaq 100 technology sector index jumped 3.7 per cent; it has gained 7.3 per cent in the past two sessions.
Traders cited the relative strength in the S&P 500 after breaking the closely watched 1,100 level Tuesday as a catalyst for short sellers to pocket gains and as a damper on overall selling pressure.
Economic data showed growth in the US service sector was steady in September and private hiring picked up, suggesting the economy was not yet slipping into recession.
A jump in the price of commodities, including crude oil and copper, lifted shares in the materials and energy sectors.
US crude futures snapped a three-day losing streak with a gain of more than five per cent, while copper prices added 1.7 per cent.
The Dow Jones industrial average gained 131.24 points, or 1.21 per cent, to 10,939.95 at the close. The S&P 500 added 20.09 points, or 1.79 per cent, to 1,144.04. The Nasdaq Composite rose 55.69 points, or 2.32 per cent, to 2,460.51.
Yesterday’s gains kept the benchmark S&P 500 near the lower end of a trading range that goes back two months as the deepening debt crisis in Europe remains unresolved. Greece is expected by many to be forced to restructure its debt.
Among the biggest gainers in technology were shares of Yahoo, up 10.1 per cent at $15.92 after a report that Microsoft may be preparing a bid for the search engine company.
Research in Motion was up 12.4 per cent at $23.60 on speculation the BlackBerry maker could be acquired.
The US economy’s services sector expanded in September, slightly faster than forecast by a Reuters poll, while the private sector added 91,000 jobs in September, increasing optimism about tomorrow’s non-farm payrolls report from the Labor Department.
About 9.7bn shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, above this year’s daily average of 8bn shares.