New York CNN Business –
Is the worst really over on Wall Street? It’s too early to tell. But stocks rebounded sharply on Tuesday after Monday’s big rally.
The Dow was up more than 700 points, or 2.4%, in the afternoon. The Dow has soared nearly 1,500 points in the past two days. It is now back above the key 30,000 milestone and is around 19% of its most recent record high, meaning it is no longer in a bear market.
The S&P 500 and Nasdaq gained 2.7% and 3% respectively. But both indexes remain in bearish territory, with more than a 20% discount on their historical highs.
It looks like the market bears may be going into hibernation, at least temporarily. Not even news of North Korea firing a missile over Japan was enough to keep the bulls from celebrating.
“It almost feels like a panic rally. The mood in the market got too sour and people started jumping in,” said Callie Cox, US investment analyst at eToro. “But this rally seems random. It’s great to see stocks going up, but these moves are a bit disorienting. I’m being cautious.”
Market sentiment has improved on renewed hopes that banking giant Credit Suisse ( CS ) can avoid a financial collapse similar to that of Wall Street firm Lehman Brothers 14 years ago.
There have been growing fears that Credit Suisse is in serious trouble. But the bank’s share price has recovered in the past two days and the cost to insure Credit Suisse’s bonds also fell. This is a sign that investor anxiety about the bank’s future has eased somewhat.
The main European stock markets have recovered in recent days and restless investors are relaxing a bit. One fund manager noted that there are more companies looking attractive of late given the big pullback in global markets so far this year.
“There are opportunities in Europe. There are some companies that we’ve admired from afar that are becoming interesting,” said Louis Florentin-Lee, manager of Lazard’s international quality growth portfolio.
In other corporate news, semiconductor stocks rose after chip giant Micron ( MU ) announced plans to spend $100 billion over the next two decades to build a new plant in upstate New York. Shares of Micron ( MU ) rose 5%. Semiconductor companies Intel ( INTC ), Nvidia ( NVDA ) and AMD ( AMD ) also rallied.
Shares of Twitter (TWTR) jumped nearly 13% on reports that Elon Musk is again offering to buy the social media site for $44 billion, or $54.20 per share. The stock stalled on pending news.
A smaller-than-expected interest rate hike by the Reserve Bank of Australia is also cheering Wall Street. Central banks around the world are raising rates to fight inflation. But economic and market uncertainty could lead the Federal Reserve and other banks to slow the pace of rate hikes.
The concern is that too aggressive rate hikes could lead to a major recession. CEOs surveyed by KPMG US predict a downturn in the next 12 months and worry it won’t be mild or brief.
But bond investors are now starting to weigh in on the possibility that the Fed will back off on its rate-hiking rage. The benchmark 10-year U.S. Treasury yield, which briefly rose to 4% and hit its highest level since 2008 last week, has since fallen and is now back around 3.6% .
Investors no longer seem as nervous about the future as they were just a week ago. The VIX ( VIX ), a key gauge of volatility on Wall Street, fell about 3% on Tuesday.
The CNN Business Fear & Greed Index, which looks at the VIX and six other measures of market sentiment, also moved out of Extreme Fear territory. But it remains at scary levels.