- U.S. stocks rise after Monday’s drops
- Tech shares weigh on indexes in Europe and Asia
- Trade tensions pressure China stocks
U.S. stocks climbed Tuesday after a rocky start to the quarter, though recent declines among some popular technology names kept investors on guard.
The Dow Jones Industrial Average rose 224 points, or 1%, to 23866, while the S&P 500 added 0.7% and the tech-heavy Nasdaq Composite climbed 0.5%.
The gains came a day after the S&P 500 and Nasdaq Composite fell more than 2% apiece, pulled down by sliding technology shares.
The recent pressure on tech giants, which led gains in 2017 and early 2018, has driven many investors to question once popular strategies that involve purchasing stocks that have gone up the most in a bet on their continued strength.
“Tech has provided strong leadership for equities for some time, and with concerns about regulatory risk and business models, that potentially raises the risk that the current correction extends,” said John Stopford, head of multiasset income at Investec Asset Management.
The broader S&P 500 technology sector rose 0.5% Tuesday, with most of the so-called FAANG stocks—a group that includes Facebook, Amazon.com, Apple, Netflix and Google parent Alphabet—edging higher. Facebook shares were recently up 0.4%, while Amazon.com was up 0.6% and Netflix rose 1.1%.
Meanwhile, shares of music-streaming company Spotify began trading Tuesday on the New York Stock Exchange at $165.90 a share, giving the company a valuation of $29.5 billion. The company went public through a nontraditional route known as a direct listing. Spotify shares were recently down 3.1% from their open.
Since the stock market began struggling for traction, investors have jumped to and from different issues, including tariffs, Facebook’s user-data issues and the threat of a trade war, to explain what happened, said Tony Dwyer, chief market strategist for Canaccord Genuity.
“We’re shifting the reasons for the correction, which means it’s not fundamental,” he said. “It’s relieving a ridiculous level of enthusiasm that was present in January.”
The prospect of a trade war between the U.S. and China also added to the cautious tone, investors and analysts said. China announced tariffs Sunday of as much as 25% on American pork and eight other kinds of goods, as well as 15% tariffs on fruit and 120 types of commodities.
The retaliatory tariffs announced by China, though small as a proportion of U.S. exports, may yet have a bigger impact on economic growth by hitting market confidence and delaying investment decisions, Moody’s Investors Service said in a report.
“It’s almost like a Whac-A-Mole game of risk…this revolving door of issues popping up regularly that in aggregate are dampening risk sentiment,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management.
The longer this choppy trading continues, the less “buy the dip mentality” we will see, she added, although she expects strong earnings growth will continue to power the stock market higher this year.
Elsewhere, markets in Europe, which were closed Monday for a holiday, followed U.S. markets’ decline when trading resumed Tuesday.
The Stoxx Europe 600 closed down 0.5%, echoing a mostly downbeat session in Japan and China.
Japan’s Nikkei Stock Average fell 0.5% with tech exporters including electronics company TDK and Fanuc, a maker of industrial robots, leading the declines. The Shanghai Composite dropped 0.8% while the startup heavy ChiNext index fell 1.5%.
--Gregor Stuart Hunter contributed to this article.
Write to Riva Gold at riva.gold@wsj.com and Allison Prang at allison.prang@wsj.com