Afterpay is almost back to breakeven for the week after an ugly sell-off on Tuesday.
The post Why the Afterpay Ltd (ASX:APT) share price is bouncing back on Wednesday appeared first on The Motley Fool Australia. –
The Afterpay Ltd (ASX: APT) share price has reversed most of yesterday’s losses following a strong rebound on Wall Street overnight.
What’s driving the Afterpay share price?
Wall Street paved the way for today’s gains, with all major indices bouncing about 1%.
The S&P 500 Index (SP: .INX) added 45 points, or 1.05%. The Dow Jones Industrial Average Index (DJX: .DJI) was up 312 points, or 0.92%.
And perhaps more relevant to the Afterpay share price, the tech-heavy Nasdaq Composite (NASDAQ: .IXIC) recouped 178 points or 1.25%.
Technology shares shrugged off concerns about rising yields, even as benchmark US Treasury yields continued to climb.
Overnight, 10-year US Treasury yields hit session highs of 1.54% and are currently fetching 1.55%, the highest since mid-June.
Rising yields have driven concerns that higher inflation is here to stay, despite the US Federal Reserve’s previous assessment that it was only “transitory”.
Richly-valued technology shares are the most sensitive to higher yields, which affect how investors value the company’s all-important future profits.
Nonetheless, bargain hunters were quick to step up in last night’s session, driving broad-based gains across all sectors except real estate and utilities.
Communication services, financials and tech were among the best performing sectors in the US.
Afterpay’s US-listed rival Affirm Holdings Inc (NASDAQ: AFRM) closed 3.27% higher after plunging 8.42% on Tuesday. While Afterpay’s soon-to-be parent company Square Inc (NASDAQ: SQ) rallied 4.3% to US$235.98.
Based on Square’s closing price, its takeover exchange ratio of 0.375 shares and current exchange rates, this implies a theoretical value of $121.52 a share for Afterpay.
The Afterpay share price has closely tracked the performance of Square since its takeover offer 2 months ago.
Should you invest $1,000 in Afterpay right now?
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Why is the Afterpay (ASX:APT) share price plunging 5% today?
Why Afterpay, Atomo, Opthea, & Sealink shares are falling today
Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Affirm Holdings, Inc., and Square. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.