By Yasin Ebrahim

Investing.com – The S&P 500 climbed Tuesday, led by energy and tech after U.S. bond yields fell following as less hawkish-than-expected from Federal Reserve Chairman Jerome Powell calmed fears of aggressive Fed policy tightening. 

It rose 0.9% and gained 0.5% or 183 points. The Nasdaq increased 1.4%.

Powell said that the Fed will normalize its policy, including ending bond buying, raising rates and letting its bonds mature.

“I would expect that this year 2022 will be the year in which we take steps toward normalization [of monetary policy],” Powell said.

That would involve “ending asset purchases in March, raising rates over the course of the year  … and “perhaps later this year, we will start to allow the balance sheet to run off.”

Rising Treasury yields which have weighed down growth areas of the market such as tech took a rest and supported tech’s rebound pushing the wider market higher.

Meta Platforms (NASDAQ:), formerly know as Facebook, Amazon (NASDAQ:), Apple (NASDAQ:) and Microsoft (NASDAQ:), Alphabet (NASDAQ:), which make up about a quarter of the S&P 500.

The recent pullback in tech was linked to “to the fear of a Fed being more hawkish and more aggressive in its policies going forward … but Powell calm the markets in his hearing,”  Darren Schuringa, CEO of ASYMmetric ETFs said in an interview with Investing.com on Tuesday.

“The most powerful lever the Fed has to pull on right now is starting to shrink its balance sheet by selling bonds,” Schuringa added. “But Powell backed away that saying we’re going to let our balance sheet roll off … that’s not as disruptive in the market as selling bonds.” 

Following a jump of 5% in Advanced Micro Devices, (NASDAQ:), Semiconductors saw a slight increase in losses. KeyBanc elevated its rating for the stock from overweight to sector weight. KeyBanc also cited growth in cloud data centers in 2022 as a reason for this upgrade.

The top gains for energy were also evident as oil prices rose on optimism that the demand effect from the Omicron Impact may not have as great an impact as originally thought.

Occidental Petroleum (NYSE) Hess(NYSE:) and APA, (NASDAQ:), were the leaders in the sector’s upward movement. The latter was up over 8%.

As a sign that there is a renewed interest in risk assets, the markets for utilities and consumer staples are now on the defensive side.

A day earlier than the U.S. Inflation Report due Wednesday, which is scheduled to be released on Wednesday, this rally has taken place in the wider market. It’s expected that the U.S. will report its highest rate of inflation since 1982. 

“The risk to the market is to the downside ahead of inflation report because I think the probability is CPI comes in hotter than expected, according to Schuringa. “If inflation is much hotter,  there’s going to be [renewed]The Fed must act.