Wall Street tech stocks rose sharply Tuesday after tipping off in a volatile previous session.

The broad-based S&P 500 index was up 0.5 percent by late U.S. morning after opening lower on early New York deals. Its information technology sub-index rose by 1.1 percent.

The Nasdaq Composite reading was up 1.2 percent. The tech-heavy Nasdaq briefly fell into correction territory on Monday before recovering and ending the session 0.1 percent higher.

Markets have been battling for direction in the past few days as traders debate whether or not inflation has peaked and how aggressively the Federal Reserve will act to reverse it.

Speaking to the Senate Banking Committee on Tuesday, Fed chairman Jay Powell said high inflation is taking a “toll” and the central bank will act to keep it from “solidifying.”

After strong US labor data last week and ahead of Wednesday’s numbers that Reuters polled economists expect US consumer prices to rise 7 percent in the year through December, markets saw the Fed’s first rate hike in the pandemic. Era priced in through March. The investment bank Goldman Sachs expects four US interest rate hikes this year.

“Now it’s all about the Fed and nothing else really matters,” said Hani Redha, portfolio manager at PineBridge Investments.

The US Federal Reserve, which started in March 2020, produces around 120 billion sheets a month.

Quantitative easing, Redha said, “had taken investors further down the risk curve” by raising prices and lowering bond yields, “so you go into stocks and then into the more speculative areas like unprofitable tech companies.”

“Now everything is going into the opposite, they are shrinking the balance sheet and drawing excess liquidity out of the system.”

But Anatole Kaletsky, an analyst at the research house Gavekal, argued that it makes sense to “buy the dip” after the Nasdaq correction.

“Inflation has peaked and is definitely not as bad as it looks,” he said. “The year-over-year inflation rates that everyone is panicking about are misleading because they include large repayments for the price erosion in the first year of the pandemic.”

“Governments and central banks have obvious incentives to keep borrowing costs down,” he added, as sovereign and corporate debt built up during the ultra-low interest rate era.

The benchmark 10-year US Treasury bond yield fell 0.02 percentage points to 1.76 percent after trading above 1.8 percent on Monday. The yield on the two-year government bond, which is closely tracking interest rate expectations, remained constant at 0.901 percent.

Government bond prices tend to fall in response to expectations of higher interest rates and inflation, lowering real returns on fixed income securities.

Europe’s regional stock index Stoxx 600 rose 0.8 percent after falling 1.5 percent on Monday and its worst daily performance since November.

In Asia, the Hang Seng share index in Hong Kong closed unchanged and the Nikkei 225 in Tokyo fell 0.9 percent. Brent crude, the energy benchmark, rose about 3 percent to $ 83.52 a barrel.

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