Stocks regain much of the ground they lost a day earlier
Stocks jumped on Wall Street on Tuesday, making up much of the ground they had lost a day earlier, when worries flared about spreading cases of the more contagious Delta variant of the coronavirus.
The comeback is the latest rebound after a pullback as investors continue to try to assess the extent to which rising infections may hurt the economic recovery.
The Standard & Poor’s 500 index rose 64.57 points, or 1.5%, to 4,323.06. The gain erased most of the benchmark index’s loss from Monday’s 1.6% drop, its biggest decline since May.
Airlines, cruise operators and other stocks that sank a day earlier were back in the winning column. American Airlines climbed 8.4% and Carnival gained 7.5%. Technology, financial, industrial and healthcare stocks also powered a big share of the benchmark index’s broad gains.
The Dow Jones industrial average rose 549.95 points, or 1.6%, to 34,511.99. The blue chip index lost 725 points a day earlier. The Nasdaq composite gained 223.89 points, or 1.6%, to end at 14,498.88.
Small-company stocks mounted the strongest comeback. The Russell 2000 index outpaced the other major indexes with a gain of 63.62 points, or 3%, to 2,194.30.
The sharp one-day rebound for the broader market shows yet again just how choppy trading has been as investors try to figure out the lingering virus’ effects on inflation, the broader economy and businesses including airlines and banks. The broader market has managed to keep gaining ground even with all the churn, and the benchmark S&P 500 notched several records over the last few weeks.
The spread of the Delta variant has become a worry spot for investors and policymakers. The Centers for Disease Control and Prevention has said an estimated 83% of cases in the U.S. are tied to the Delta variant. Although tens of millions of Americans have been vaccinated, there remains a significant percentage of Americans who are either reluctant or outright hostile to the idea of being vaccinated.
Los Angeles County last weekend reinstituted an indoor mask mandate as the region’s infection rate was climbing quickly yet again. Other parts of the country, such as southern Missouri, are flooded with COVID-19 patients, straining hospitals once again.
Bond yields fell sharply Monday on fears that the strong economic recovery from the pandemic could be put at risk from additional lockdowns or coronavirus cases. The yield on the 10-year Treasury note dipped as low as 1.14% early Tuesday but reversed course and was up to 1.21% from 1.18% the day before. A week ago, it was trading at 1.42%.
“We’re seeing a more dramatic extension of what we experienced over the last couple of weeks, which is really the market searching for a narrative,” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.
Investors are looking for whatever clues they can get to better gauge the continued trajectory of the economic recovery. A range of sources — comments from the Federal Reserve, outlooks from companies, economic data — is being used to get a clearer picture of what the economy may look like throughout the rest of this year and into 2022.
Wall Street is also in the midst of earnings reporting season. IBM rose 1.5% after the company reported better-than-expected revenue and profits, helped by its cloud computing business. Hospital operator HCA Healthcare jumped 14.4% after handily beating Wall Street’s second-quarter profit and revenue forecasts.
Outside of earnings, drug distributors made some big moves after reports that they were on the verge of a $26-billion settlement of opioid lawsuits. AmerisourceBergen rose 3.4% and McKesson rose 3.1%.