Shares rose on Wall Street on Tuesday as investors returned to buying after a defeat the day before caused by concerns about the spread of a more contagious strain of COVID-19.
The S&P 500 index rose 1.5 percent as of 1:43 PM EST (5:43 PM GMT), regaining most of the ground it lost from Monday’s decline, the largest since May.
The Dow Jones Industrial Average rose 558 points, or 1.7 percent, to 34,521; and the Nasdaq Composite Index rose 1.6 percent. The Russell 2000 Index of smaller company stocks outperformed the other major indices with a gain of 2.9 percent.
The sharp one-day recovery for the broader market shows once again how choppy trading has been as investors try to figure out the lingering impact of the coronavirus on inflation, the broader economy and businesses ranging from airlines to banks. The broader market has managed to gain ground, even with all the churn, and the benchmark S&P 500 has set several records in recent weeks.
The spread of the more contagious Delta strain of COVID-19 has become a concern for investors and policymakers. The U.S. Centers for Disease Control and Prevention has said an estimated 83 percent of cases in the U.S. are related to the Delta variant of the virus. While tens of millions of Americans have been vaccinated, a significant percentage of them are either reluctant or downright hostile to the idea of doing so.
Los Angeles Country reinstated a mandate for indoor masks last weekend as the region’s infection rate was once again on the rise. Other parts of the country, such as Southern Missouri, are inundated with COVID-19 cases that are putting new pressure on hospitals.
Bond yields fell sharply on Monday on fears that the strong economic recovery from the pandemic could be jeopardized by additional lockdowns or coronavirus cases. The 10-year Treasury yield fell to 1.14 percent Tuesday but has changed course and rose to 1.21 percent from 1.18 percent the day before. Just a week ago, the 10-year note was trading at a yield of 1.33 percent.
“We’re seeing a more dramatic expansion of what we’ve been through in recent weeks, which is the market looking for a story,” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.
Investors are looking for all the clues they can get to better gauge the ongoing trajectory of the economic recovery. Everything from comments from the Federal Reserve to corporate outlook and economic data is being used to get a clearer picture of what the economy could look like for the rest of this year and into 2022.
Wall Street is also in the midst of earnings reporting season. IBM rose 1 percent after the company reported better-than-expected revenues and profits, helped by its cloud computing business. Hospital operator HCA Healthcare rose 14 percent after handily beating Wall Street’s second-quarter earnings and revenue forecast.
Profits aside, drug distributors have made some big strides after reports they’re about to settle $26 billion in opioid lawsuits. AmerisourceBergen rose 3.7 percent and McKesson rose 2.9 percent.
Paint and coatings producer PPG Industries fell 4.6 percent after its second-quarter profit fell short of analysts’ forecasts and it faces supply chain problems and higher raw material prices.