Wall Street surged on Tuesday, with the Dow Jones Industrial Average ending more than 2% higher as investors bought energy and materials stocks and looked beyond a recent rise in coronavirus cases.
The S&P 500 energy, materials and industrial indexes jumped more than 2%, while health , technology and consumer staples each rose more than 1%.
Amazon slipped 0.6%. It and other recently strong performing technology and growth stocks, including Facebook and Netflix, recovered from deeper losses, giving the Nasdaq a last minute spurt.
"Today is counterintuitive. We are reading about California's economy shutting down and a record spike in cases in Florida, and yet you have energy stocks leading," said Bob Shea, chief executive officer at TrimTabs Asset Management in New York. "We're seeing a mini-rotation into value."
JPMorgan Chase & Co, the largest U.S. lender, rose 0.6% after it posted a smaller-than-expected 51% drop in second-quarter profit.
Wells Fargo & Co tumbled 4.6% after booking a quarterly loss for the first time since the 2008 financial crisis. Citigroup Inc dropped 3.9% after it reported a steep fall in quarterly profit.
The S&P 500 banks index dropped 1.2% as the three banks set aside a combined $28 billion to cover potential losses on loans to borrowers hurt by the coronavirus pandemic.
Wall Street has reclaimed most of its coronavirus-driven losses since March as a raft of monetary and fiscal stimulus and upbeat economic data raised hopes of a swift post-pandemic recovery.
But a recent record surge in COVID-19 cases and new business restrictions, particularly in California, has again raised uncertainty about how it may take for the economy to recover.
Alabama, Florida and North Carolina reported record daily increases in COVID-19 deaths on Tuesday.
Following a drop of more than 2% in the Nasdaq on Monday, some investors had worried that Wall Street's recent rally might be ending. With Tuesday's quick rebound, the Nasdaq has gone two months without suffering two days in a row of declines.
Investors are bracing for what could be the sharpest drop in quarterly earnings for S&P 500 firms since the 2008 financial crisis, according to Refinitiv IBES data.
The Dow Jones Industrial Average surged 2.13% to end at 26,642.59 points, while the S&P 500 gained 1.34% to 3,197.52.
The Nasdaq Composite added 0.94% to 10,488.58.
Delta Air Lines Inc dropped 2.65% after it warned it will be more than two years before the industry sees a sustainable recovery from the "staggering" impact of the coronavirus pandemic, with demand largely tracking the curve of infections in different places.
Moderna Inc jumped 4.5% after it said it plans to start a late-stage clinical trial for its COVID-19 vaccine candidate on or around July 27.
Advancing issues outnumbered declining ones on the NYSE by a 1.92-to-1 ratio; on Nasdaq, a 1.63-to-1 ratio favored advancers.
The S&P 500 posted seven new 52-week highs and no new lows; the Nasdaq Composite recorded 35 new highs and 31 new lows.
Volume on U.S. exchanges was 10.7 billion shares, compared with the 11.8 billion average for the full session over the last 20 trading days.
Global equity markets rebounded, buoyed by a surge in cyclical stocks on Wall Street as investors bet the economic recovery would overcome a rollback of California's reopening, while safe-haven gold prices solidified gains above $1,800 an ounce.
The euro rose versus the dollar on optimism about the possibility of a European Union stimulus package, but market participants remained cautious, leading U.S. and euro-zone government debt yields to fall.
A decline in U.S. consumer prices that showed core inflation remained well under the Federal Reserve's target of 2% sent Treasury yields lower, as did concerns about the rollback of business reopenings in California announced Monday.
Europe's broad FTSEurofirst 300 index closed down 0.79% and initially weighed on MSCI's world equity index after a decline overnight in Asian equities. The global benchmark index, which tracks shares in 49 nations, rose 0.53% to 543.54, driven by a rebounding Wall Street.
Cyclicals outperformed as technology shares were slammed in Europe, where the tech subsector fell 2.6% in its biggest one-day sell-off in just over a month.
"But the cyclicals are extremely attractive from a valuation standpoint and an ultimate recovery standpoint. They have the most to gain back," he said.
While the rollback of business reopenings may weigh on the economy, new coronavirus infections are hitting younger people and ultimately will not replicate earlier fatality rates, he said.
Oil rebounded. Brent crude settled up 18 cents at $42.90 a barrel. U.S. crude rose 19 cents to settle at $40.29 a barrel.
The euro rose 0.44% to $1.1390. The U.S. dollar index , which measures the safe-haven greenback against a basket of six rival currencies, slid 0.32% to 96.242.
Gold prices inched up, rising above the $1,800 level, underpinned by concerns over the mounting coronavirus cases globally and as many regions reintroduced curbs to restrict the outbreak.
U.S. gold futures settled mostly unchanged at $1,813.40. Spot gold rose $7.1051 to $1,809.81 an ounce.
Fear can influence gold, said Kristina Hooper, chief global market strategist at Invesco in New York.
"On days when stocks are up and gold is up, part of the story is the Fed has made stocks attractive to investors, but there is apprehension that is driving up gold prices as well," Hooper said.
The 10-year U.S. Treasury note fell 1.5 basis points to yield 0.6250%.
U.S. consumer prices increased by the most in nearly eight years in June as businesses reopened, but the underlying trend suggested inflation would remain muted and allow the Fed to keep injecting money into the ailing economy.
The U.S. Labor Department's consumer price index rose 0.6% last month, the biggest gain since August 2012, after easing 0.1% in May. The increase ended three months of declines and was driven by rising prices of gasoline and food.
Tension grew between Washington and Beijing after the United States rejected China's claims to offshore resources in most of the South China Sea.
President Donald Trump scheduled a late afternoon news conference that will be related to Hong Kong and China, two administration officials said.
Tuesday is the deadline for the president to sign legislation approved by the U.S. Congress to penalize banks doing business with Chinese officials who implement Beijing’s draconian new national security law on Hong Kong.
The Shanghai index fell 0.7% despite official figures showing Chinese exports and imports topped forecasts in June, while China continued to buy significant amounts of commodities, including iron ore.
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