US: Nasdaq rallies as interest rate worries ebb

THE Dow fell on Tuesday as recession fears pounded petroleum-linked equities, but tech shares rallied with markets eyeing chances for less severe interest rate hikes in light of the weakening economic outlook.

After a bruising morning spent deep in negative territory, US equities rallied in the afternoon, enabling two of the three major indices to finish higher.

The shift came as the yield on the 10-year US Treasury note, a proxy for interest rates, fell further below three per cent.

“The concern of a recession is deepening,” said Quincy Krosby of LPL Financial, who noted the correlation between tech shares and drops in Treasury bond yields.

“You look for growth, where you can find it,” Krosby said. “Many of those large tech names that have been beaten up by the market become attractive again, particularly when the bond yields are lower.”

The tech-rich Nasdaq Composite Index ended up 1.8 per cent at 11,322.24. The Dow Jones Industrial Average declined 0.4 per cent to 30.967.82, while the broad-based S&P 500 added 0.2 per cent at 3,831.47.

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Major US indices struggled early in the session, a day that saw European bourses tumble and US oil futures close below US$100 a barrel for the first time in about two months.

Investors are jittery about the upcoming earnings season in light of soaring inflation and the possibility firms will sharply cut their forecasts.

Petroleum producers had a bad day, with ConocoPhillips losing 4.7 per cent and ExxonMobil 3.1 per cent. But large tech names prospered, including Google parent Alphabet, up 4.4 per cent and Amazon, up 3.6 per cent. AFP