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S&P, Nasdaq rise as investors seek bargains after steep drop

By Tanya Agrawal

(Reuters) – The S&P and the Nasdaq reversed course to climb higher in afternoon trading on Wednesday, as investors sought bargains a day after the major indexes posted their biggest one-day loss since before the election.

Apple was up about 1 percent and provided the biggest boost to the three major indexes.

However, the Dow was lower, weighed down by a 6.3 percent fall in Nike after the world’s largest footwear maker missed quarterly revenue estimates.

“What we’re seeing today is buyers being opportunistic and trying to gain entry into the overall market,” said Robert Pavlik, chief market strategist at Boston Private Wealth in New York.

“That’s why we’re seeing tech and industrials stocks, which last a lot on Tuesday, lead today.”

Still, the market remained cautious ahead of the first major legislative test of Donald Trump’s presidency.

Investors are closely watching the outcome of the healthcare bill, which Republican party leaders are aiming to move in the House as early as Thursday, as a signal to how Trump can push forward his tax cuts and simpler regulation agenda.

Trump has been trying to rally Republican lawmakers behind the plan, which will dismantle Obamacare.

Some investors fear that if the healthcare reform act runs into trouble or takes longer-than-expected to pass, then Trump’s tax reform policies may face setbacks.

“The market was giving Trump somewhat of a talk-the-talk leeway,” said Ryan Larson, head of U.S. equity trading at RBC Global Asset Management in Chicago.

“It was supportive of what the administration was talking about. We’re starting to get into a phase where that grace period is coming to an end and what the market wants to see more walk-the-talk as opposed to talk-the-talk.”

Oil prices touched four-month lows after data showed U.S. crude inventories rising faster than expected.

The S&P 500 has run up about 10 percent since the election in November, spurred mainly by Trump’s agenda of tax cuts and infrastructure spending, but valuations have emerged as a concern.

The benchmark index is trading at about 18 times forward earnings estimates against the long-term average of 15, according to Thomson Reuters data.

At 12:21 p.m. ET (1621 GMT) the Dow Jones Industrial Average was down 30.94 points, or 0.15 percent, at 20,637.07, the S&P 500 was up 1.46 points, or 0.06 percent, at 2,345.48.

The Nasdaq Composite was up 12.81 points, or 0.22 percent, at 5,806.64.

Five of the 11 major S&P sectors were higher, with the technology index’s 0.58 percent gain leading the advancers.

The financial sector, which suffered its worst daily drop since June on Tuesday, was down 0.22 percent. Bank of America and Wells Fargo were down about 0.7 percent.

Gold prices rose to a three-week high and the dollar index, which measures the greenback against a basket of currencies, had touched its lowest level since early February.

Sears Holdings slumped 16.5 percent to $ 7.60 after the retailer warned on Tuesday about its ability to continue as a going concern after years of losses and declining sales.

Declining issues outnumbered advancers on the NYSE by 1,656 to 1,174. On the Nasdaq, 1,794 issues fell and 947 advanced.

The S&P 500 index showed 10 new 52-week highs and 14 new lows, while the Nasdaq recorded 14 new highs and 69 new lows.

(Reporting by Tanya Agrawal; Editing by Sriraj Kalluvila)

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