US stocks have recouped some of their heavy losses from three days of selling with beaten-down technology giants boosting the market as investors bought the dip.
Bargain hunters moved in to buy overvalued technology stocks, a day after the Nasdaq entered a correction, 10 per cent below last week’s record closing high on September 2.
Tesla shares rebounded 11 per cent after yesterday suffering their biggest one-day percentage drop of 21 per cent.
The biggest companies on the market, Apple (+4pc), Microsoft (+4.3pc) and Amazon (+3.8pc) rebounded, with Microsoft and Apple the top performers in the blue chip Dow Jones index.
Facebook (+0.9pc) and Google-parent Alphabet (+1.6pc) also climbed.
The Dow Jones index came off its earlier highs but still closed 1.6 per cent, or 440 points, higher at 27,940 and the S&P 500 index put on 2 per cent to finish at 3,399 — its best one-day performance since June.
The recently battered Nasdaq surged 2.7 per cent to 11,142, its best day since April.
The tech giants have driven the pandemic rally on Wall Street, benefiting from people turning to online as they stay at home because of the coronavirus.
Jack Ablin, chief investment officer at Cresset Capital Management in Chicago, said it was “a massive, surprising rebound”.
The big sell-off was also partly driven by concerns that holders of call options would sell massive amounts of stock they bought as hedges during the rally.
Media reports last week said that Japan’s SoftBank Group made big bets on equity derivatives tied to technology firms.
Europe rallies, oil climbs back
European stocks also rose overnight. The FTSE 100 in London climbed 1.4 per cent to 6,013, the DAX in Germany increased 2.1 per cent to 13,237 and the CAC 40 in Paris put on 1.4 per cent to 5,043.
At 7:20am (AEST), the ASX SPI 200 futures index was up 1.3 per cent to 5,935, indicating the local market will follow Wall Street higher today.
The ASX 200 index lost 2.2 per cent yesterday after the third session of losses on Wall Street.
The Financial Times reported that AstraZeneca could resume trials for its experimental coronavirus vaccine next week.
That is after it paused global trials of its experimental COVID-19 vaccine on a safety concern. Its shares rose in London.
The Australian dollar has also recovered some of its losses from yesterday, where it fell a cent amid the broad-based sell-off.
At 7:20am it was up 0.9 per cent to 72.78 US cents, helped by a weaker greenback.
Spot gold climbed to $US1,946.66 an ounce, up 0.8 per cent.
Brent crude oil rose 2.2 per cent to $US40.64 a barrel after being caught up in yesterday’s sell-off.