S&P close a record, capping fast rally

Virus losses since March regained

Wall Street clawed back the last of the historic, frenzied losses unleashed by the new coronavirus, as the S&P 500 closed at an all-time high Tuesday.

The day's move was a relatively mild one, nudging the index up 7.79 points, or 0.2%, to 3,389.78. That eclipses the S&P 500's previous record closing high of 3,386.15, which was set Feb. 19, before the pandemic shut down businesses around the world and knocked economies into their worst recessions in decades.

The Dow Jones Industrial Average fell 66.84 points, or 0.2%, to 27,778.07. It remains 6% below its record set in February. The Nasdaq composite had already returned to a record, thanks to huge gains for the big tech stocks that dominate it. It hit a new high Tuesday, climbing 81.12 points, or 0.7%, to 11,210.84.

The S&P 500's milestone caps a 51.5% rally that began in late March. The index, which is the benchmark for many stock funds at the heart of 401(k) plans, is now up nearly 5% for the year.

The stock market's sprint back to an all-time high also means that the nearly 34%

plunge for the S&P 500 from Feb. 19 through March 23 was the quickest bear market on record. It lasted barely more than a month.

Tremendous amounts of aid from the Federal Reserve and Congress helped the rally, which built higher on signs of budding growth in the economy. More recently, corporate profit reports that weren’t as bad as expected have helped boost stock prices.

The market spent the past few days within striking distance of a new high, but falling short of the milestone, until the last minutes of trading Tuesday.

The lightning recovery is even more remarkable considering how much the economy is still struggling and how uncertain the path ahead remains. Millions of Americans are continuing to get unemployment benefits, and businesses across the country are still shutting their doors. The coronavirus continues to seep throughout the world, with more than 5.4 million known cases and 170,000 deaths in the United States alone.

Many investors acknowledge the disconnect between the stock market and the broader economy, but they say the rally has been built on top of several supports.

Key among them is that the Federal Reserve and Congress have plowed trillions of dollars into the economy, to keep it from plunging even more deeply and to prevent a full-blown financial crisis. Their unprecedented moves helped halt the S&P 500’s free fall in March.

The five biggest companies in the S&P 500 by market value, meanwhile, have continued to pile up blowout profits, even as earnings crater for the rest of the market. The biggest tech companies increasingly drive the S&P 500’s movements almost by themselves, and they’ve benefited from the pandemic because it accelerated work-from-home and other tech trends. Apple, Microsoft, Amazon, Facebook and Google’s parent company are all are up more than 16% for 2020 so far.

The market’s huge gains have been slowing in recent weeks, and many investors say the easiest gains have been made. But optimism remains strong across much of Wall Street.

The yield on the 10-year Treasury note dipped to 0.67% from 0.69% late Monday. In March, the yield had touched its record low just beneath 0.34%.

Higher yields can be an indication that investors are upgrading their expectations for inflation and the economy.