Nasdaq rises as tech stocks rebound after sell-off, lead market higher

U.S. stocks rebounded on Wednesday following a session defined by major weakness in technology stocks.

The Nasdaq Composite rose 0.6% as major tech names rebounded. The S&P 500 rose 0.3%, while the Dow was little changed with a 10 point gain.

Major tech shares rebounded in early trading. Apple rose 1.6% and Tesla gained 0.7% after falling 3.5% and 1.7% respectively on Tuesday. Amazon, Alphabet and Microsoft also rose modestly.

There was good earnings news in the tech sector as well. Activision Blizzard rose 5% after better-than-expected earnings reports.

Outside of tech, General Motors shares climbed 2.5% in early trading after earnings blew past expectations.

On Tuesday, investors exited technology and growth stocks, pushing the Nasdaq Composite down 1.9%. Along with losses in Apple and Tesla, shares of Netflix lost 1.2%, and Microsoft dropped 1.6%. Amazon and Facebook shed 2.2% and 1.3%, respectively. Alphabet fell 1.6%.

The S&P 500 wiped out Monday’s gains, dropping 0.7%. The Dow Jones Industrial Average ended the day up about 20 points after dropping more than 300 points at one point Tuesday.

The small-cap benchmark Russell 2000 fell 1.3%. Reopening plays like airlines, casinos and cruise lines also saw selling pressure.

There are a number of possible reasons for the downward pressure, including fears about rising inflation, concerns the Federal Reserve may have to taper monetary stimulus earlier than telegraphed, and the potential for tax hikes in the months ahead.

U.S. equities hit lows of the day following Treasury Secretary Janet Yellen’s comments that interest rates may have to rise somewhat to keep economy from overheating. Later in the day, the former Fed Chairman tempered her comments somewhat, saying she respects the central bank’s independence and was not trying to influence decision-making there. “It’s not something I’m predicting or recommending,” Yellen told the Wall Street Journal’s CEO Council Summit in follow-up comments.

While earnings have been coming in strong for the first quarter and companies have been raising guidance, stocks are not always moving upward following good news. Investors told CNBC this could mean the positive outlook is already priced into stocks.

Private payrolls rose by 742,000 jobs in April, according to ADP. This result was below expectations of 800,000 jobs from economists surveyed by Dow Jones.

ADP did revise its March report upward by 48,000 jobs. These numbers come ahead of Friday’s closely-watched jobs report.

The IHS Markit U.S. services purchasing managers index came in at 64.7 for April, ahead of the projected reading of 63.3, according to economists surveyed by Dow Jones. PMIs are calculated such that readings above 50 represent expansion in an economic sector.