Growth stocks lead bounce on Wall Street after brutal selloff

© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 26, 2022. REUTERS/Brendan McDermid

By Shreyashi Sanyal and Ankika Biswas

(Reuters) – Wall Street’s main indexes rose for the first time in six sessions on Tuesday, with megacap growth stocks doing most of the heavy lifting following a bruising selloff on worries of a rate-hike induced economic slowdown.

Rate-sensitive shares including Amazon.com Inc (NASDAQ:), Apple Inc (NASDAQ:), Microsoft Corp (NASDAQ:), Meta Platforms Inc and Tesla (NASDAQ:) Inc, rose between 0.4% and 3.2%.

Technology, communication services and consumer discretionary sectors led the rise with gains of about 1% each.

“We could see a near-term bottom,” said Jason Pride, chief investment officer for private wealth at Glenmede, adding that certain technical indicators still showed a strong negative sentiment, suggesting that the market is a bit oversold.

“But that bottom may be more of a bear market rally similar to the one experienced earlier this summer.”

At 10:10 a.m. ET, the was up 114.32 points, or 0.39%, at 29,375.13, the S&P 500 was up 21.07 points, or 0.58%, at 3,676.11, and the was up 103.40 points, or 0.96%, at 10,906.32.

However, the early gains showed some signs of losing steam after U.S. Federal Reserve officials reminded investors that the central bank’s priority was to control domestic inflation, with St. Louis Fed President James Bullard making the case for more rate hikes to come in future meetings.

Chicago Fed President Charles Evans earlier in the day said the central bank will need to raise interest rates by at least another percentage point this year.

U.S. stocks started the week on a weak footing after the Dow Jones Industrial Average, in the previous session, confirmed it has been in a bear market since early January, while the benchmark relinquished the last of its gains made in a summer rally.

Concerns about corporate profits coming under pressure from soaring prices, an economic downturn and higher interest rates have roiled Wall Street in the past two weeks.

Analysts have cut their S&P 500 earnings estimates for the third and fourth quarters, and for all of 2022. For the third quarter, S&P 500 earnings are seen rising just 4.6% year-over-year, compared with the 11.1% growth expected at the start of July.

Analysts at Wells Fargo (NYSE:) now see the U.S. central bank taking its target range for the Fed funds rate to 4.75%-5.00% by the first quarter of 2023.

Oil stocks got a shot in the arm following a sharp recovery in crude prices, with the S&P 500 energy sector up 1.42%.

Moderna (NASDAQ:) Inc gained 2% after the U.S. Food and Drug Administration on Monday authorized an additional five batches of the vaccine maker’s updated COVID-19 booster shots made at Catalent (NYSE:) facility in Indiana.

Advancing issues outnumbered decliners for a 2.40-to-1 ratio on the NYSE and a 2.61-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week high and 15 new lows, while the Nasdaq recorded 21 new highs and 93 new lows.