The Nasdaq surged 391.75 points (2.0%) to 19,733.59, partly offsetting the 3.1% plunge seen during yesterday's session. The S&P 500 also jumped 55.42 points (0.9%) to 6,067.70 while the narrower Dow rose 136.77 points (0.3%) to 44,850.35.
Nvidia (NVDA) surged 8.8% after a 17% plunge, though buying interest remained subdued as traders awaited the Federal Reserve's monetary policy announcement on Wednesday. The Fed is expected to leave interest rates unchanged, but its statement will be closely watched for future rate clues. While some economists worry rates may stay high for an extended period, many anticipate cuts in the first half of the year. The CME FedWatch Tool indicates a 74.5% chance of a quarter-point rate cut by June.
The Commerce Department reported a sharp 2.2% decline in U.S. durable goods orders in December, following a revised 2.0% drop in November, driven by a plunge in transportation equipment orders. Additionally, the Conference Board's U.S. consumer confidence index fell to 104.1 in January from a revised 109.5 in December.
Software stocks led the way with a 3% gain in the Dow Jones U.S. Software Index, while brokerage stocks rose 1.3% in the NYSE Arca Broker/Dealer Index. Semiconductor and networking stocks recovered from a previous sell-off, but airline stocks fell sharply, with the NYSE Arca Airline Index dropping 2.4%. Oil, commercial real estate, and pharmaceutical stocks saw notable weakness, partly offsetting gains in other sectors.
Asia-Pacific stocks moved mostly lower with several major markets closed for holidays. Japan's Nikkei 225 Index slumped by 1.4%, while Australia's S&P/ASX 200 Index edged down by 0.1%. The major European markets ended the day mixed. While the French CAC 40 Index slipped by 0.1%, the U.K.'s FTSE 100 Index rose by 0.4% and the German DAX Index climbed by 0.7%.
In the bond market, treasuries gave back ground as traders looked ahead to the Fed announcement on Wednesday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose 2.3 bps to 4.55%.
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