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.

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Also on Tuesday, AstraZeneca (AZN (opens in new tab), -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 (opens in new tab), +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 (opens in new tab), +2.0%) and Nvidia (NVDA (opens in new tab), +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 (opens in new tab), -11.1%) took another dive today after Morgan Stanley analyst Adam Jonas downgraded the electric vehicle (EV) stock (opens in new tab) 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 Holdings (SWX (opens in new tab), +6.6%) got a big boost after the Wall Street Journal (opens in new tab) reported activist investor Carl Icahn has a substantial stake in the Las Vegas-based utility company. The activist investor (opens in new tab) reportedly wants to dissuade SWX from buying Questar Pipeline Company – a gas transportation and storage business owned by Dominion Energy (D (opens in new tab)) and a previous M&A target of Berkshire Hathaway's (BRK.B (opens in new tab)) energy division – writing that "it's no time to embark on a major new investment" given current share underperformance, according to the WSJ.
• U.S. crude oil futures jumped 1.7% to end at $78.93 per barrel.
• Gold futures slipped 0.4% to $1,760.90 an ounce to snap a four-session winning streak.
• The CBOE Volatility Index (VIX) declined 6.8% to 21.39.
• Bitcoin prices climbed another 3.7% to $51,210.36, crossing the $50,000 threshold for the first time in roughly a month. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)

Don't Let Up Your Guard

Please, please, keep the sighs of relief to a dull roar. Potential short-term risks that could keep the market zigging and zagging are lurking.

As mentioned above, analysts remain optimistic about Congress's ability to solve its latest debt-ceiling squabble, but a deal is far from done. The same can be said about a long-awaited infrastructure bill. You can also add fears of a China real estate bubble burst and tooth-grinding over the Fed's plans to the list.

While you can't completely insulate your portfolio from this or any other turbulence, you can do a few things to smooth out returns over the long haul – and among them is generating some of your returns from consistent dividend payments.

We've recently extolled the virtues of the Dow's above-average dividend payers (opens in new tab), and highlighted seven bond funds (opens in new tab) that offer a combination of stability and income. Another way to keep the boat from rocking – too much, at least – is a heaping helping of pharmaceutical stocks.

The healthcare sector (opens in new tab) broadly provides both offensive and defensive properties given both the growth and necessity of health spending. Big Pharma often adds another element, with many mega-cap pharmaceutical firms delivering high yields to boot. Read on as we highlight nine Big Pharma stocks that should be on any income investor's radar: