Support from Fed helps stocks rally
Trading remains skittish across many markets
Smaller stocks were among the market’s biggest gainers, which often happens when investors are getting more optimistic about the economy.
NEW YORK – Stocks rose again Tuesday, part of a strong and worldwide rally for markets, after a big rebound in buying at U.S. stores and online raised hopes that the economy can escape its recession relatively quickly.
The S&P 500 climbed 1.9% for its third straight gain, bringing it back within 8% of its record set in February. Gains have built in recent weeks as reports bolster investor expectations that the worst of the downturn may have already passed.
Continuing, immense support from the Federal Reserve is also calming markets, and its chair said Tuesday that the central bank will continue to use all its tools to cushion the blow of the worst recession in decades. But trading remains very skittish across markets as worsening coronavirus trends in several global hotspots raise the possibility that all the improvements could unravel.
The S&P 500 shot to an early 2.8% gain, lost nearly all of it at one point and then rallied back. The index finished up 58.15 points at 3,124.74.
The Dow Jones Industrial Average rose 526.82, or 2%, to 26,289.98, and the Nasdaq composite climbed 169.84, or 1.7%, to 9,895.87.
Retail sales jumped 17.7% 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. That development 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 of months.
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.
Skepticism has been high about the stock market’s run since it began climbing since hitting a bottom in late March, down 34% from its record. The huge backstops from the Fed and Capitol Hill helped halt the declines.
More recently, investors have been pushing up shares of companies that would benefit from a reopening economy on expectations that activity can rebound as governments relax shutdown restrictions put in place to slow the spread of the virus.
Such stocks were again leading the market on Tuesday. Smaller stocks were among the market’s biggest gainers, which often happens when investors are getting more optimistic about the economy. The Russell 2000 index of small-cap stocks rose 2.3%.
Nordstrom jumped 12.9% for one of the biggest gains in the S&P 500, leading a group of retailers that stand to benefit if shoppers return to stores.
The yield on the 10-year Treasury rose to 0.74% from 0.70% late Monday. It tends to move with investors’ expectations for the economy and inflation.
Gold for August delivery rose $9.30 to $1,736.50 an ounce, silver for July delivery rose 25 cents to $17.65 an ounce and July copper was little changed at $2.56 a pound.
The dollar fell to 107.28 Japanese yen from 107.33 yen. The euro fell to $1.1272 from $1.1315.