Tech, health care firms lead way as stocks gain

Stocks closed broadly higher Tuesday as more countries relaxed restrictions on businesses, raising hopes for a recovery from the historic plunge that is sweeping the global economy.

The S&P 500 gained 25.70 points, or 0.9%, to 2,868.44, though it lost about half of its early gains in a late-afternoon burst of selling. The Dow Jones Industrial Average rose 133.33 points, or 0.56%, to 23,883.09. The Nasdaq climbed 98.41 points, or 1.1%, to 8,809.12. Small stocks in the Russell 2000 index were doing even better for much of the day, before shedding some of their gains by late afternoon. The Russell 2000 rose 9.54 points, or 0.8%, to 1,273.51.

Technology and health care stocks accounted for much of the gains, which followed a strong showing in overseas markets.

Investors are cautiously optimistic that the gradual reopening of some businesses will begin to turn around the economy.

In California, some retail businesses could begin serving customers again as early as Friday, under some restrictions. Many European countries have begun relaxing strict orders meant to slow the spread of the coronavirus outbreak, while waiting to see if those moves lead to a resurgence in infections. In Asia, the first pitches of the South Korean baseball season thwacked into catchers’ mitts, albeit in stadiums with no fans in attendance.

Expectations for stronger demand for oil as more businesses get the green light to open helped drive the price of oil sharply higher, extending its mini-rally after falling to record lows last month.

“It’s investors getting a little bit ahead of themselves,” said Willie Delwiche, investment strategist at Baird. “Maybe, it’s a sense of relief that we’ve made it this far and there’s some sort of a path forward, even if it’s not real clear.”

A report released Tuesday morning showed that the U.S. services industry shrank for the first time in a decade last month, but it caused barely a ripple in the stock or bond markets. It wasn’t quite as terrible as economists had forecast.

Disney fell 3% in extended trading after the company reported a steep drop in quarterly profit as many segments of its media and entertainment offerings ground to a standstill during the coronavirus pandemic. Overall, the company said costs related to covid-19 cut Disney’s pretax profit by $1.4 billion.

Hopes that the reopening of economies will eventually lead to a pickup in demand have also recently helped oil prices climb off the floor. A barrel of U.S. oil to be delivered in June jumped 20.5% to settle at $24.56 Tuesday, up from a low point of $6.50 set late last month. Oil is still well below the roughly $60 that it cost at the start of the year, after plunging on worries that the collapse in oil demand would lead to topped-out storage tanks.

Brent crude, the standard for international pricing, gained 13.9% to close at $30.97 per barrel.

“The feeling on the floor is that energy is in a better spot, and while it’s not brilliant,” the gulf between oil supplies and demand “is starting to shift in a more positive direction,” Chris Weston of Pepperstone said in a report.

Technology stocks also continued their strong run. Apple rose 1.5%, and Microsoft gained 1.1%. The two companies alone account for 11% of the S&P 500’s market value. Tech stocks in the S&P 500 have nearly erased their losses for 2020 so far, after earlier being down as much as 23%. The sector is now down 0.3%.

In another sign of a bit less pessimism in the market, the yield on the 10-year Treasury note ticked up to 0.66% from 0.63% late Monday. Treasury yields tend to rise when investors are upgrading their expectations for the economy and inflation. But it’s still well below the 1.9% it yielded at the start of the year.