Wall Street gave up some gains Tuesday, but remained supported as investors cheered signs the economic recovery is underway even as Covid-19 infections in some parts of the U.S. continued to climb.
The Dow Jones Industrial Average rose 2.52%, or 649 points, the S&P 500 gained 2.29%, while the Nasdaq Composite added 2%.
Retail sales surged 17.7% in May, rebounding from a record slump in April. The better-than-expected data suggested that consumer spending is on the mend, though some on Wall Street remain wary over whether the momentum would continue.
“The comeback was much faster than expected, and looks like a beginning of a v-shaped recovery in consumer spending. That’s assuming the positive momentum is sustained, something we remain skeptical about,” Jefferies said in a note.
Retailers including Macy’s, Gap and Nordstrom surged on the back of the strong retail sales report.
Monetary policy was also in focus as Federal Reserve chairman Jerome Powell cooled some hopes that the central bank’s corporate bond-buying program, which kicked off today, would be aggressive.
Powell also touted signs of a recovery, though continued to stress that the outlook remains uncertain amid a lack of visibility about the trajectory of the disease. “Until the public is confident that the disease is contained, a full recovery is unlikely.”
The remarks from Powell come in the wake of growing infections in some parts of the U.S. after restrictions were lifted.
Virus hospitalizations in Texas rose 8.3% overnight to hit a record. Florida’s Department of Health on Tuesday reported that daily infections rose 2,783 overnight to a record high in the state.
Energy led the broader market gains, underpinned by a rise in oil prices after the International Energy Agency lifted its oil demand forecast for 2020.
The IEA upgraded its estimate on oil demand to 91.7 million barrels per day (bpd) in 2020, 500,000 bpd higher than its previous forecast.
In technology, Apple (NASDAQ:AAPL) climbed 2.8% after Citigroup (NYSE:C) increased its price target on the stock to $400 per share from $310 per share, citing numerous tailwinds, including upside from tech giant’s wearables business.