Stocks rally globally on hopes of recovery
NEW YORK — Stocks are rallying worldwide Tuesday, and Wall Street is heading for its third straight gain after U.S. retail sales rebounded sharply last month.
The data bolstered hopes that the economy can pull out of its recession relatively quickly, and the S&P 500 was up 2 percent. But trading remains skittish as worsening coronavirus trends in several hot spots around the world rattle investors. The S&P 500 shot to an early 2.8 percent gain, lost nearly all of it at one point and then rallied back.
The tenuous rise for the U.S. market followed up on stronger gains for European and Asian stocks. Treasury yields also climbed in another sign of improving optimism, but trading there was likewise volatile.
The Dow Jones Industrial Average was up 566 points, or 2.2 percent, at 26,330, as of 2 p.m. Eastern time, and the Nasdaq composite was up 1.8 percent.
“The markets have been looking forward to the economy reopening, and that’s a large part of the story for the next few months,” said Bruce Bittles, chief investment strategist at Baird.
“My feeling is that while reopenings and things get better, it won’t be without some back steps, and I think it’ll be a rocky few months more for the markets.”
Retail sales jumped 17.7 percent from April to May, more than double economists’ expectations, to retrace some of their record-setting plunges in March and April as businesses reopened across the country. It follows earlier reports that the U.S. job market unexpectedly strengthened last month.
Economists at IHS Markit said this could be the shortest recession on record for the United
States, perhaps just a couple months.
Among other encouraging signs spurring markets worldwide: Researchers in England said they have the first evidence that a drug can improve survival from COVID-19, one that is already widely available and cheap.
Still, caution continues to run through markets. A record number of fund managers in Bank of America’s monthly survey say the stock market is overvalued following its nearly 40 percent surge since late March.
The rally has been showing some cracks recently as investors worry that a possible resurgence of infections could push governments to reinstate lockdown measures to slow the spread of the virus. Even if the stay-at-home orders don’t come back, worried consumers and businesses could pull back on their spending.
Analysts on Tuesday cited discouraging trends in Florida and Texas. China also locked down a third neighborhood in Beijing to contain a new outbreak that has infected more than 100 people after the country appeared to have largely contained the virus since it first appeared there late last year.