NEW YORK: The S&P 500 rallied on Tuesday to finish higher and secure its biggest quarterly percentage gain in more than two decades as improving economic data bolstered investor beliefs that a stimulus-backed rebound for the US economy was on the horizon.
Coming off a drop of 20% in the first quarter, the biggest quarterly decline since the financial crisis in the fourth quarter of 2008, the S&P rallied more than 19.95% to notch its biggest quarterly gain since 1998, at the height of the tech boom.
The gains have been fuelled by unprecedented levels of fiscal and monetary stimulus and the easing of restrictions.
But the S&P 500 is still down about 4% on the year, and gains in June stood at just 2% due to the flare-up in virus cases that has threatened to delay reopenings and derail a tentative economic recovery. Federal Reserve Chairman Jerome Powell reiterated in comments on Tuesday that the path of the economy is "highly uncertain."
"What everybody sees is if we can get something that puts an end to the spread or the spread becomes less, there is literally so much money out there that the Fed has put out there that when we turn, it is going to be a rocket ship the other way," said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.
Still, comments from Anthony Fauci, the US government's top infectious diseases expert, who said there was no guarantee the United States will have an effective COVID-19 vaccine and warned the virus spread "could get very bad," were a reminder that a full economic recovery could be a long road.
Gains were capped on the Dow, pressured by a 5.75% drop in Boeing Co, as the airplane maker gave back some of Monday's 14% surge after Norwegian Air canceled orders for 97 aircraft and said it would claim compensation.
The Dow Jones Industrial Average rose 217.08 points, or 0.85%, to 25,812.88, the S&P 500 gained 47.05 points, or 1.54%, to 3,100.29 and the Nasdaq Composite added 184.61 points, or 1.87%, to 10,058.77.
The 17.78% gain in the Dow marked its best quarterly performance since a 21.56% rally in the first quarter of 1987 while the Nasdaq's 30.63% jump was its best quarter since a 48.18% gain in the fourth quarter of 1999.
All of the 11 major S&P 500 sectors traded higher, with a 2.2% rise in energy stocks leading the pack.
Micron Technology Inc jumped 4.8% as it forecast higher-than-expected current-quarter revenue on strong demand for its chips that power notebooks and data centers.
The company's results also boosted other chipmakers and lifted the Philadelphia semiconductor index by 2.7%.
Uber advanced 4.9% after reports that the ride-hailing services company was in talks to buy food-delivery app Postmates.
Advancing issues outnumbered declining ones on the NYSE by a 2.02-to-1 ratio; on Nasdaq, a 2.09-to-1 ratio favoured advancers.
The S&P 500 posted 13 new 52-week highs and 1 new low; the Nasdaq Composite recorded 76 new highs and 16 new lows.
Volume on US exchanges was 10.72 billion shares, compared with the 13.55 billion average for the full session over the last 20 trading days.
Comments
Comments are closed.