Tech companies lead indexes broadly higher on Wall Street

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Technology companies led a broad rally in U.S. stocks Wednesday afternoon, placing the market on track to recoup its losses from a day earlier.

Traders pivoted to riskier holdings as encouraging developments overseas helped alleviate investors’ anxiety over the global economy. Lawmakers in Britain were seeking a less chaotic exit from the European Union and political tensions in Hong Kong eased.

The rally reversed Tuesday’s losses, when disappointing economic data and an escalation in the ongoing trade war between the U.S. and China led to a sell-off that ended a three-day winning streak for the market.

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Chipmakers, which have been at the mercy of trade war volatility, did much of the heavy lifting for the technology sector Wednesday. Intel rose 4% and Nvidia rose 2.7%. Apple, which relies on China as a key part of its supply chain, rose 1.8%.

Communication services, industrial and financial stocks also notched solid gains. Activision Blizzard climbed 4.8%, Honeywell gained 2.3% and Citigroup added 1.6%.

Traders moved away from safe-play holdings, such as utilities and real estate, which lagged the market, as did the health care sector. Humana dropped 2.4%.

Investors have been worried that the trade war and a slowing global economy could tip the U.S. into a recession. The bond market has reflected these fears, with long-term bond yields falling below short-term ones in August, a so-called inversion in the U.S. yield curve that has frequently predicted previous recessions.

Long-term bond yields moved back above short-term ones on Wednesday. The yield on the 10-year Treasury note rose to 1.47% from 1.46% late Tuesday. The yield on the 2-year Treasury note fell to 1.44% from 1.46%.

KEEPING SCORE: The S&P 500 was up 1% as of 3:30 p.m. Eastern Time. The Dow Jones Industrial Average rose 226 points, or 0.9%, to 26,343. The Nasdaq, which is heavily weighted with technology stocks, climbed 1.3%.

OVERSEAS: Asian stocks finished broadly higher. The Hang Seng in Hong Kong surged 3.9% after the government withdrew an extradition bill that had set off three months of protests in the region.

Stocks in Europe also rose following the latest developments in Britain’s plans to exit the European Union. Britain’s parliament will attempt to defy Prime Minister Boris Johnson and his plans to pull out of the EU on Oct. 31 with or without a withdrawal agreement. Leaving the EU without a deal that covers trade and other issues could result in economic chaos for Britain and complicate trade with member nations in the EU.

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ANALYST’S TAKE: While geopolitical developments in Britain and Hong Kong are giving the markets a lift, investors should keep in mind Tuesday’s weak manufacturing activity report as yet another harbinger of an economic slowdown.

“Without any sort of catalyst to help turn sentiment around we anticipate that continued weakness in the manufacturing sector is likely to bleed over into the consumer sector, which can then drag down the economy further,” said Peter Donisanu, investment strategy analyst at Wells Fargo Investment Institute.

TRADE WAR: On Sunday, the U.S. imposed a 15% tariff on about $112 billion of Chinese products. China responded by charging tariffs of 10% and 5% on a list of American goods.

The escalation in the trade conflict had been expected since early August when the U.S. announced plans for the new tariff measures, prompting China to retaliate.

Negotiators from the U.S. and China are supposed to meet in September to continue trade talks.

The trade dispute between the world’s two largest economies dragged the benchmark S&P 500 to its second monthly loss of the year in August.

DISSAPOINTING DRUMSTICKS: Tyson Foods slumped 7.6% after the meat producer slashed its 2019 profit forecast because of commodity costs and a fire at a beef processing plant. The company and its competitors are all facing higher costs for animal feed such as corn because flooding delayed the planting season.

BAG HANDOVER: Tapestry climbed 5.1% after CEO Victor Luis resigned from the upscale handbag maker less than a month after it warned investors about a profit slump. The company has been struggling with its Kate Spade brand, which it bought in 2017. It also owns the Coach brand.

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AP Business Writer Damian J. Troise contributed.

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