Stocks closed higher on Wall Street Tuesday, driving the S&P 500 and Dow Jones Industrial Average to their highest levels in nearly three months as optimism over the reopening of the economy overshadowed lingering worries about the coronavirus pandemic.
The S&P 500 rose 1.2%, for a time climbing above the 3,000-point mark for the first time since March 5, until a burst of selling in the final minutes of trading trimmed the market's gains. The Dow spent much of the day above the 25,000-point threshold for the first time since March 10, but the late pullback knocked it slightly lower. The indexes haven't been at these levels since before widespread business shutdowns aimed at slowing the spread of the outbreak sent the U.S. economy into a sharp skid.
The post-Memorial Day rally followed a strong rise in global markets as more nations push to open their economies. Financial and industrial stocks accounted for much of the market's gains. Companies that rely on consumer spending also rose broadly. Airlines were big winners as traders welcomed data showing a pickup in air travel during the long holiday weekend.
“That was one of the concerns of the recovery, that people would be hesitant to resume their lives,” said Willie Delwiche, investment strategist at Baird. “This is a stock market that’s looking ahead to the economy improving and maybe moving beyond the lockdown mentality...Two weeks from now, if you have a spike in cases, then everyone will reconsider things.”
The S&P 500 rose 36.32 points, or 1.2%, to 2,991.77. The index was coming off a solid week and is on track for a second-straight month of gains. It remains down 11.7% from its all-time high in February.
The Dow climbed 529.95 points, or 2.2%, to 24,995.11. The index had been up more than 700 points. The Nasdaq rose 15.63 points, or 0.2%, to 9,340.22. The Russell 2000 index of small companies gained 37.54 points, or 2.8%, to 1,393.07.
Fears of a crushing recession due to the coronavirus sent the S&P 500 into a skid of more than 30% in March. Hopes for a relatively quick rebound and unprecedented moves by the Federal Reserve and Congress to stem the economic pain drove a historic rebound for stocks in April and have bolstered optimism that the market won’t return to the depths seen two months ago.
Fresh optimism about the development of potential vaccines for COVID-19 have also helped lift stocks. Investors are keenly focused on the process of reopening the U.S. economy, which is likely to accelerate over the summer. Concerns remain that reopening businesses could lead to another surge in infections, potentially hobbling efforts to get the nation’s battered economy growing again.
A couple of economic reports gave traders more reason for encouragement Tuesday. The Commerce Department said sales of new U.S. homes inched up 0.6% last month, a surprising gain that hints at the relative health of many consumers. Over the past 12 months, sales are down 6.2%. Meanwhile, the Conference Board said its index of consumer confidence ticked up in May to 86.6 from a reading of 85.7 in April. The index is still down sharply from February's reading, when it climbed to 130.7.
Optimism over the prospect that consumers will be eager and able to spend money as more businesses open helped push travel-related stocks sharply higher Tuesday. Norwegian Cruise Line climbed 15.3%, Royal Caribbean jumped 14.9% and Carnival rose 12.6%.
Airline stocks soared on indications that air travel is recovering from mid-April lows, although it remains down sharply from pre-pandemic levels. The Transportation Security Administration said about 340,000 people passed through airport checkpoints on Memorial Day. That’s 86.4% less than last year’s holiday, but it’s the smallest percentage drop in U.S. air travel since March 22.
UBS upgraded Southwest Airlines to “buy” from “neutral” on better prospects for a recovery in domestic travel. Shares of all six leading U.S. carriers — Delta, American, United, Southwest, Alaska and JetBlue — jumped between 12.6% and 16.3%.
Financial stocks led Wall Street's rally. The sector gained 5%. It's still down 25.3% so far this year.
Bond yields were broadly higher, in another sign of optimism. The yield on the 10-year Treasury note, a benchmark for interest rates on many consumer loans, rose to 0.70% from 0.66% late Friday.
Reassuring comments by the head of China’s central bank helped spur buying in global markets Tuesday. France’s CAC 40 climbed 1.5%, while Germany’s DAX gained 1%. The FTSE 100 in Britain, which was closed on Monday, rose 1.2%. Asian markets closed higher.
In another confidence-boosting development on Wall Street, the New York Stock Exchange reopened its trading floor Tuesday for the first time since mid-March, when it closed due to the coronavirus outbreak.
New York Gov. Andrew Cuomo rang the opening bell at the NYSE, which allowed a limited number of traders back to the floor. It required traders to adhere to social distancing guidelines and wear masks.
“The message of the NYSE reopening is symbolic not only for our community and our country, but it is for the globe,” said Jonathan Corpina, senior managing partner at Meridian Equity Partners and one of the NYSE floor traders. “It’s showing that we are ready to reopen our economy and reopen our country and move things in the right direction.”
AP Video Journalist Ted Shaffrey and AP Business Writer David Koening contributed.