Spotify listing helps lift tech stocks as Wall Street rebounds

Stocks on Wall Street jumped in the final hour of another volatile trading session, recouping most of Monday’s losses.

The Dow Jones Industrial Average rose 389.17 points, or 1.65%, to 24,033.36.

The broader S&P 500 lifted 1.3% to 2614.45 and the tech-heavy Nasdaq Composite climbed 1.0% to 6941.28.

The Dow Jones stayed in positive territory throughout, while the S&P 500 hovered between small gains and losses before accelerating late in the session.

Technology shares helped lead the rebound, with all of the so-called FAANG stocks – Facebook, Amazon.com, Apple, Netflix and Google parent Alphabet – rising after Monday’s heavy selloff.

Facebook rose 0.5%, Netflix added 1.2% and Amazon rose 1.5%.

“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,” says John Stopford, head of multiasset income at Investec Asset Management.

However, for others, Monday’s fall was an opportunity to buy high-profile stocks against a background of a positive global growth outlook and forthcoming earnings reports expected to show strong results.

Monday’s selling may have been exacerbated by relatively low trading volumes, as well as an overreaction to data showing U Sfactory activity slowing from the previous month, says Phil Orlando, chief equity strategist at Federated Investors.

“I think we got sold off too aggressively,” he adds.

Oil price rise boosts energy shares
Energy, consumer staples and materials sectors of the S&P 500 all rose more than the broader index. The energy sector jumped 1.7% after US crude oil for May delivery rose 0.8% to $US63.51 a barrel.

Shares of music-streaming company Spotify opened at $US165.90 a share but fell throughout the session. The opening price valued the company at $US29.5 billion.

The shares closed at $US149.01 for a market cap of $US26.5b, putting it in the top 10 of tech IPOs. The Swedish company listed without a public pool, making several of its top executive shareholders overnight billionaires.

Sony Music Entertainment, the world’s second-largest record company, has a 5.7% stake worth $US1.55b while Chinese internet giant Tencent Holdings, which swapped some equity with Spotify in December, has a 9.1% stake valued at $US2.46b.

Spotify remains the global leader in music streaming, with 157 million active users, including 71m who pay. Investors will be closely monitoring its margins, as most of the company's costs are the music royalties it pays. These rise as the company expands, making profits elusive.

As stocks rose, the yield on the benchmark 10-year US Treasury note snapped a four-day streak of declines, rising to 2.784% from 2.732% on Monday. It was the largest one-day increase in more than six weeks.

The Stoxx Europe 600 closed down 0.5%, echoing a mostly downbeat session in Asia.

France’s CAC 40 fell 0.3%, Germany’s DAX slumped 0.8% and the UK’s FTSE 100 was off 0.4%.

This followed a 0.5% fall in Japan’s Nikkei Stock Average and the Shanghai Composite dropping 0.8%.