U.S. stocks traded higher Tuesday as markets looked to pare steep October losses in volatile trading.
The S&P 500 gained 0.65 percent as gains in real estate, communications and materials stocks carried the index out of correction territory. The Dow Jones Industrial Average rose 160 points as Goldman Sachs, McDonald’s and Boeing all outperformed.
The tech-heavy Nasdaq Composite added 0.6 percent as gains in Intel and Comcast offset losses in Amazon and Netflix. Stocks closed lower in the prior session, giving up sharp gains in a turbulent session that saw the Dow travel more than 900 points.
Market participants cited the possibility of more U.S.-China tariffs, a drop in tech stocks and worries over higher interest rates for the decline.
The Dow is down 6.9 percent this month, its worst performance since May 2010. The S&P 500 is off by 8.7 percent in October, its worst month since February 2009. On Monday, the S&P 500 closed in correction territory, down 10.2 percent from its record.
“Obviously we’re in a correction phase of the stock market and I think investors have to realize that,” said Bruce Bittles, chief investment strategist at Baird. “The monetary environment has changed. As you can see, even with a 10 percent change in the stock markets, interest rates have barely moved lower.”
“Typically bull markets are global in scope and the question was: would we follow the rest of the world, or would they follow us? I think we’ve found the answer,” Bittles added.
Despite the largely bearish tone in October, it is not uncommon for the stock market to end bad months with a bounce. Since 1952, when the S&P 500 was down 8 percent or more with two trading days left in a month, the benchmark bounced higher 80 percent of the time in those final two days, with an average gain of 2.75 percent, according to Bespoke Investment Group.
“If we can get through the week without too many setbacks, then investors may begin to see the light at the end of the tunnel and sense opportunities in the markets, rather than view it with anxiety and fear which has certainly been the case in recent weeks,” Craig Erlam, senior market analyst at OANDA, said in a note.