The Nasdaq Composite Index, led by Big Tech names such as Facebook, Amazon, Apple, Netflix and Google, closed up 178 points, or 1.3%, at 14,434. Nasdaq had tumbled 2.1% on Monday for its worst one-day loss in three months as investors averse about inflationary risks were also rattled by a Congressional probe against Facebook.
More allegations about the ills of Facebook’s Instagram platform and its impact on teenagers surfaced in US Senate testimony on Tuesday from a former employee. But the social media giant’s shares took the concerns in their stride, rising 6% after Monday’s 5% drop.
The broad-based Dow Jones Industrial Average, comprising mostly industrial stocks, finished up 0.9%, also recovering all of Monday’s drop.
The blue-chip S&P 500, which groups the top 500 stocks on the New York Stock Exchange, closed up 1%, clawing back most of Monday’s 1.3% tumble.
“It will be interesting to see just how much appetite investors have for this rebound, given how much uncertainty remains,” Craig Erlam, analyst at online trading platform OANDA, said.
“The energy crisis is not getting better. Are investors really willing to ignore all of this and more when central banks are pulling back amid higher inflation? The test of this won't be today's move, but the ability to extend it to the end of the week and make up significant lost ground.”
Inflation has become one the top concerns of the Biden administration as it tries to battle price pressures from bottlenecks in an economy straining to recover from the coronavirus pandemic. To deal with inflation, economists warn that the Federal Reserve might have to raise interest rates for the first time since the COVID-19 outbreak of March 2020, a move that could further hamper growth.
Worries over price pressures grew even more on Monday as oil prices hit seven-year highs after the Organization of the Petroleum Exporting Countries and its allies decided to only increase production gradually despite a squeeze in global supplies of crude.