Wall Street ends higher on tech buying as investors wait on inflation data
S&P, Nasdaq rebound after Monday's sell-off
US-listed shares of Chinese companies fall
PepsiCo rises after results
Recasts with preliminary closing details
By David French
Oct 8 (Reuters) -Wall Street's benchmarks ended higher on Tuesday, recouping some of the previous session's losses, as investors bought back in to technology stocks and investors shifted their focus to upcoming inflation data and the start of third-quarter earnings season.
All three of the main indexes suffered a sell-off on Monday, falling roughly 1% each, as they were pressured by surging Treasury yields, escalating Middle East tensions, and a re-evaluation of U.S. rate expectations.
The easing of Treasury yields somewhat on Tuesday, however, meant investors were drawn to high-growth stocks, which benefit from lower debt costs to fuel their growth, such as technology companies.
The information technology index .SPLRCT led the gainers among the S&P 500 sectors. It was aided by advances by Palantir Technologies PLTR.N and Palo Alto Networks PANW.O.
Heavyweight tech names were also buoyant, helping to push the Nasdaq .IXIC to the highest percentage gain of the three main benchmarks.
Nvidia NVDA.O was the pick of the so-called Magnificent Seven tech stocks, but there were also gains for Apple AAPL.O, Tesla TSLA.O and Meta Platforms META.O.
According to preliminary data, the S&P 500 .SPX gained 54.75 points, or 0.96%, to end at 5,750.69 points, while the Nasdaq Composite .IXIC gained 255.06 points, or 1.42%, to 18,178.97. The Dow Jones Industrial Average .DJI rose 121.08 points, or 0.29%, to 42,075.32.
While the abatement of rising Treasury yields helped tech stocks, it is still interest rate policy that is guiding traders and the U.S. equity markets.
Investors have been locked in all year on the U.S. Federal Reserve and how it plans to deliver its long-expected bout of interest rate cuts, with each new economic data set studied for how it could influence the thinking of the central bank.
Last week's data releases, including Friday's stronger-than-expected jobs report, had prompted investors to trim their rate cut bets slightly, albeit leaning more toward a 25 basis-point cut at the next Fed meeting in November, as opposed to 50 bps.
Traders have now priced in a nearly 89% chance of a 25 basis-point interest rate cut in November, according to CME FedWatch.
Markets now await consumer price index data, due this Thursday, for the next signpost on the path of interest rates.
"I do think (Friday's) labor market report, and the CPI report combined, are the two primary items for the Federal Reserve heading in to their next meeting," said Jason Pride, chief of investment strategy and research at Glenmede.
He added that if the CPI lands anywhere in the ballpark of what is expected, that would portend a 25 bps November cut.
Most S&P sectors gained. Among the few trailing were the materials sector .SPLRCM, which fell as metal prices slipped on waning optimism over China's stimulus measures.
U.S.-listed shares of Chinese companies also slid, tracking losses in domestic stocks. Shares of Alibaba Group BABA.N, JD.com JD.O and PDD Holdings PDD.O slumped.
Energy .SPNY was also a decliner, slipping as oil prices retreated following Monday's rally. O/R
Third-quarter earnings are also coming in to focus, with major banks scheduled to report this Friday. The estimated earnings growth rate for the S&P 500 is 5%, according to LSEG estimates.
PepsiCo PEP.O gained after the snack maker trimmed its forecast for annual sales growth, but reported adjusted earnings per share above estimates.
Reporting by Lisa Mattackal and Pranav Kashyap in Bengaluru and David French in New York; Editing by Shinjini Ganguli and Matthew Lewis
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