Stock Market Today: Tech Recovers in Broad-Market Bounce-Back

Stocks’ autumnal volatility continued Tuesday, with equities ricocheting well into the green after a dreadful start to the week.

Among the reasons for optimism: a report from Institute for Supply Management that showed a better-than-expected September reading from the services sector (61.9, up from 61.7 in August and versus 59.9 expected).

“Overall, we view today’s ISM services reading as encouraging, suggesting that overall service sector activity has weathered the recent re-intensification of the COVID-19 pandemic better than expected,” says Barclays economist Jonathan Millar.

Also on Tuesday, AstraZeneca (AZN, -1.1%) requested emergency-use authorization of an antibody treatment that would offer additional protection from COVID-19 to people with compromised immune systems, while Johnson & Johnson (JNJ, +0.2%) requested similar emergency approval for its COVID vaccine booster shot.

Debt-ceiling concerns appeared to be relegated to the background Tuesday. The latest development: Late Monday, Senate Majority Leader Chuck Schumer said he would schedule a Wednesday vote to raise the debt limit – a vote that Minority Leader Mitch McConnell has already threatened to torpedo. While most analysts remain confident that Congress will raise the debt ceiling, the risks of not doing so are palpable: 

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“In 2011, Congress waited until the very last minute to fix the debt ceiling issues and S&P downgraded the country’s debt rating to AA+ from AAA because of the questions surrounding that willingness to pay its obligations,” says independent broker-dealer LPL Financial. “Now, another rating agency, Fitch, has threatened to do something similar if Congress fails to act soon.”

The technology sector, which was punished the most in Monday’s rout, rebounded thanks to gains in the likes of Microsoft (MSFT, +2.0%) and Nvidia (NVDA, +3.6%). This came despite another push in the 10-year Treasury yield to as high as 1.54%; rising rates have been blamed for tech’s struggles of late.

The sector’s surge helped power a 1.3% advance in the Nasdaq Composite to 14,433; the Dow Jones Industrial Average (+0.9% to 34,314) and S&P 500 (+1.1% to 4,345) also produced sizable gains.

Other news in the stock market today:

• The small-cap Russell 2000 produced a more muted 0.5% improvement to 2,228.
• Lordstown Motors (RIDE, -11.1%) took another dive today after Morgan Stanley analyst Adam Jonas downgraded the electric vehicle (EV) stock to Underweight from Equal Weight (the equivalents of Sell and Hold, respectively). He also slashed his target price for RIDE to $2 from $6, well below today’s close at $5.20, saying the company’s recent sale of its Lordstown, Ohio, plant to Foxconn for $230 million is roughly 20% below what he estimates the value of the facility to be. With today’s slide, shares of RIDE are now down 74.2% for the year-to-date.
• Southwest Gas…