Stock markets bounced Tuesday morning after falling more than 1,000 points Monday in one of the largest drops since the economic shutdowns of the coronavirus pandemic.
The S&P 500 stock index was up more than 60 points, or 1.3 percent, in Tuesday morning trading while the Dow Jones Industrial Average climbed more than 300 points and the Russell 2000 index of smaller U.S. companies jumped by 1 percent.
Technology stocks continued to waver after Monday’s rout, though some were back in positive territory.
Apple stock was down more than 3 percent while Nvidia stock jumped more than 4 percent and Microsoft shares were up more than 2 percent.
Shares of Meta Platforms Inc. increased in value by more than 3 percent while Amazon stayed near its Monday close of about $161 per share.
Markets tanked Monday following a weaker-than-expected employment report released by the Labor Department on Friday that prompted a sell-off fueled by a strengthening yen.
Unemployment in July increased to 4.3 percent from 4.1 percent in June and the economy added 114,000 payrolls, well shy of the 175,000 that economists were predicting.
The rise in unemployment set off a recession indicator known as the Sahm rule, which predicts a downturn in the economy when the three-month rolling average of the unemployment rate climbs more than a half percentage point from recent lows.
Claudia Sahm, the eponymous inventor of the Sahm rule, told Bloomberg Monday that she thought the U.S. was “uncomfortably close” to a recession.
Monday’s sell-off in equity markets was further fueled by a Wall Street “carry trades,” which are stock purchases made with borrowed money in currencies that are weaker than the dollar, specifically the Japanese yen.
“The Bank of Japan raised its short term rate at its July 31 meeting. That had the effect of causing the yen to rally. As a result of that, we’ve seen the unwinding of massive carry trades by speculators,” investor Ed Yardeni, president of Yardeni Research, told The Hill.
