U.S. stocks rally as fears about Turkey subside

U.S. stocks rallied Tuesday as banks, retailers and smaller companies jumped. That helped the market recover most of its losses from the previous two days.

The Turkish lira steadied as officials from Turkey and the United States said the countries are in talks to ease diplomatic tensions, which have resulted in high tariffs on Turkish steel and aluminum. Stocks in emerging markets such as Argentina, Russia and Brazil jumped.

In the United States, the biggest gains went to small and midsize firms, which do more business domestically than the large multinationals on indexes such as the Standard & Poor’s 500 and the Dow Jones industrial average. Retailers rose, thanks in part to strong quarterly reports.

The reduced tensions with Turkey also stopped a rally in bond prices and sent yields and interest rates higher. That helped banks. Industrial and basic materials companies also rose.

The S&P 500 index climbed 18.03 points, or 0.6%, to 2,839.96. The Dow rose 112.22 points, or 0.4%, to 25,299.92. The Nasdaq composite advanced 51.19 points, or 0.7%, to 7,870.89. The Russell 2000 index jumped 17.26 points, or 1%, to 1,692.58.

Many retailers will report their quarterly results this week, a potential hint about how much money consumers are spending. Tapestry, the parent of Coach and Kate Spade, jumped 12% to $53.16 after its results beat analysts’ estimates.

Auto parts retailer Advance Auto Parts jumped 7.8% to $156.13 after its results beat expectations.

Smaller companies made outsize gains. Watchmaker Fossil rose 4.8% to $25.68. Among midsize firms, Boston Beer rose 3.9% to $291.30.

Economists say Turkey’s central bank still needs to raise interest rates significantly to strengthen its currency, but Turkey’s president has ruled out that step.

Invesco Chief Global Market Strategist Kristina Hooper said it’s common for stocks to fall across emerging markets when one country is in trouble, but that reaction isn’t necessarily justified. “We can’t treat all emerging markets the same way,” she said.

She said Argentina, like Turkey, is dealing with a plunging currency and political turmoil. But most of Turkey’s problems are specific to Turkey, and other emerging markets such as Mexico are likely to recover.

Bond prices moved down. The yield on the 10year Treasury note rose to 2.90% from 2.88%.

Health insurer Cigna rose 1.9% to $185.30 and pharmacy benefits manager Express Scripts rose 2.4% to $86 after investor Carl Icahn said he was ending his campaign to block Cigna’s acquisition of Express Scripts.

Benchmark U.S. crude slipped 0.2% to $67.04 a barrel. Brent crude slipped 0.2% to $72.46 a barrel. Wholesale gasoline rose 1% to $2.03 a gallon. Heating oil fell 0.4% to $2.13 a gallon. Natural gas rose 1% to $2.96 per 1,000 cubic feet.

Gold rose 0.2% to $1,200.70 an ounce. Silver rose 0.5% to $15.05 an ounce. Copper fell 1.8% to $2.68 a pound after weak economic reports from China.

The dollar rose to 111.22 yen from 110.69 yen. The euro fell to $1.1339 from $1.1394.