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Wall Street, TSX post gains as appetite for oversold sectors returns

REUTERS, GLOBE STAFF

Wall Street finished sharply higher on Tuesday, lifted by Apple Inc., Tesla Inc. and other megacap growth stocks after strong retail sales in April eased worries about slowing economic growth. The TSX also posted strong gains in a broad rally, as some appetite for oversold sectors such as technology returned despite concerns around soaring inflation.

Investors were cheered by data showing U.S. retail sales increased 0.9 per cent in April as consumers bought motor vehicles amid an improvement in supply and frequented restaurants.

Another set of U.S. economic data showed industrial production accelerated 1.1 per cent last month, higher than estimates of 0.5 per cent, and faster than a 0.9per-cent advance in March.

The U.S. Federal Reserve will “keep pushing” to tighten U.S. monetary policy until it is clear inflation is declining, Fed chair Jerome Powell said Tuesday. The comments confirmed the market’s view that the Fed is focused on easing price pressures even as stock market prices wobble and some investors worry aggressive tightening will tip the U.S. economy into recession.

“The idea that the Fed was going to hike a while and then pause and look around was out there, and it was on the table, but he just told us that isn’t going to occur,” said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets in New York.

“This is very consistent with what we’ve seen in the past, which is once the Fed starts hiking, they continue to hike until something breaks. Now the question becomes … what we should be looking at as a potential break,” Mr. Lyngen added.

Traders are pricing in an 85per-cent chance of a 50-basispoint rate hike in June.

Tuesday’s broad rally followed weeks of selling on the U.S. stock market that last week sawthe S&P 500 sink to its lowest level since March, 2021.

“The largest pockets of stocks that investors tend to buy have been essentially beaten up. They’re either in correction or bear market territory,” said Sylvia Jablonski, chief investment officer of Defiance ETF. “I think investors are looking at these opportunities to buy on the dip.”

The S&P 500 Banks index jumped 3.8 per cent, with Citigroup Inc. climbing almost 8 per cent after Warren Buffett’s Berkshire Hathaway Inc. disclosed a nearly US$3-billion investment in the U.S. lender.

The S&P 500 climbed 2.02 per cent to end the session at 4,088.85 points.

The S&P/TSX Composite Index closed up 284.6 points, or 1.41 per cent, at 20,491.01. The index’s gains were led by cloud-based software firm Dye & Durham, which surged 22 per cent to its highest close in over six weeks.

The energy sector climbed 1.5 percent although crudeoil, which hit a seven-week high earlier in the session, fell 1.9 per cent, on news that the United States would ease some restrictions on Venezuela’s government.

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2022-05-18T07:00:00.0000000Z

2022-05-18T07:00:00.0000000Z

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