Broad Rebound Lifts Stocks as Tech, Travel, and Small Caps Lead Recovery

Stocks delivered a strong rebound session, finishing higher across the board as participation broadened throughout the day. The S&P 500 rose 0.8% and the Nasdaq Composite gained 1.0%, recouping most of the prior session’s losses. The S&P 500 briefly traded back above its 50-day moving average before slipping just below that level at the close. The Dow Jones Industrial Average also advanced 0.8%, though it recovered only part of Monday’s decline.

Technology shares helped anchor the recovery, particularly software stocks, which attracted dip buyers after steep losses in the previous session. The rebound was aided by news that Anthropic is expanding partnerships around its Claude Cowork platform, easing fears about near-term AI disruption to enterprise software. FactSet was among the beneficiaries, posting one of the strongest gains within financials as that sector stabilized following heavy selling earlier in the week.

Financial services firms and asset managers also outperformed, while PayPal surged on reports that Stripe has expressed interest in a potential acquisition.

The information technology sector was among the day’s leaders, supported not only by software strength but also by a rebound in semiconductors. Chip stocks advanced broadly, with Advanced Micro Devices jumping after announcing a major multi-year agreement with Meta Platforms to deploy large-scale AI infrastructure systems.

Consumer discretionary stocks led all sectors higher as travel and retail names bounced from tariff-driven weakness. Expedia Group and Booking Holdings posted strong gains, while tariff-sensitive retailers such as Williams-Sonoma and Nike also recovered. Home Depot advanced after delivering an earnings beat, and mega-cap support from Tesla and Amazon reinforced the sector’s strength.

Cyclical areas joined the advance as industrials climbed and defensive groups such as utilities and consumer staples finished higher despite a softer start. Health care was the primary laggard, dragged down by weakness in managed-care insurers including Molina Healthcare and Humana. Energy stocks also edged lower as crude oil prices declined modestly.

Market breadth improved notably. Small- and mid-cap stocks outperformed, with the Russell 2000 rising 1.2% and the S&P MidCap 400 gaining 1.0%, signaling a pickup in overall risk appetite.

Overall, the session marked a constructive reversal after Monday’s selloff. While part of the move reflected technical buying, the willingness of investors to step back into beaten-down technology and software shares suggests sentiment may be stabilizing. Attention now shifts to another wave of earnings reports and the evening’s State of the Union address, where economic policy and affordability issues are expected to take center stage—potential catalysts for the market’s next directional move.

Our FTinvest 11 model portfolio advanced 0.44% to close at 1,019.74, rebounding after recent minor declines. The move reflects a constructive session as the portfolio stabilizes following its pullback from the all-time high of 1,039.51.

While still in a consolidation phase relative to its recent peak, FTinvest 11 remains solidly positive for the year and continues to demonstrate resilience above the 1,000 level. The portfolio’s disciplined, value-oriented strategy remains the foundation of its steady long-term performance.