Wall Street bounces back on renewed economic optimism
A sign for Wall Street hangs outside of the New York Stock Exchange in New York City, the U.S., June 21, 2021. /VCG

A sign for Wall Street hangs outside of the New York Stock Exchange in New York City, the U.S., June 21, 2021. /VCG

Wall Street ended sharply higher on Tuesday, rebounding from a multi-day losing streak as a string of upbeat earnings reports and revived economic optimism fueled a risk-on rally. 

All three major U.S. stock indexes gained more than 1 percent with the blue-chip Dow, on the heels of its worst day in nine months, leading the charge.

The S&P notched its first advance in four days as well as registering its strongest day since March. The Nasdaq posted its first gain in six sessions.

"It's a buy-the-dip mentality coming into the market," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. 

Economically sensitive small caps and transports outperformed the broader market. 

Benchmark U.S. Treasury yields bounced back from five-month lows, in the wake of their biggest single-session decline since February in the prior session. This helped boost rate-vulnerable banks by 2.6 percent. 

"The economically sensitive stocks are up today," Carlson added. "When the 10-year (Treasury yield) goes down in a short period of time, that typically doesn't happen with an economy that's supposed to be growing. Firming in the 10-year (yield) indicates that perhaps the economy isn't going to be falling off a cliff." 

Mounting concerns over the highly contagious Delta variant of COVID-19, now responsible for the majority of new infections, have sparked sell-offs in recent sessions as worldwide vaccination efforts gather momentum.

"Things like the Delta variant can certainly impact in the margins," Carlson said. "It doesn't take a whole lot of fear in some investors to create what we saw yesterday."

The Dow Jones Industrial Average rose 549.95 points, or 1.62 percent, to 34,511.99, the S&P 500 gained 64.57 points, or 1.52 percent, to 4,323.06 and the Nasdaq Composite added 223.89 points, or 1.57 percent, to 14,498.88.

Of the 11 major sectors in the S&P 500, all but consumer staples closed green. Industrials fared best, rising 2.7 percent.

Second-quarter reporting season has hit full-stride, with 56 of the companies in the S&P 500 having posted results. Of those, 91 percent have beaten consensus, according to Refinitiv.

Analysts now see annual S&P earnings growth of 72.9 percent for the April-June period, a significant improvement over the 54-percent growth seen at the beginning of the quarter.

Halliburton rose 3.7 percent after a bounce-back in crude prices boosted oilfield services demand, leading the company to post its second consecutive quarterly profit.

Peloton Interactive advanced 6.7 percent after announcing it would provide UnitedHealth Group's fully insured members free access to its live and on-demand fitness classes.

Moderna's stock dropped 2 percent in a volatile session on Tuesday, with the COVID-19 vaccine maker the most heavily traded company on Wall Street ahead of its debut in the S&P 500 on Wednesday.

Netflix shares dipped more than 3 percent in after-hours trading after its forecast missed estimates.

Shares of Chipotle Mexican Grill gained over 2 percent post-market after its earnings and revenue beat consensus.

Advancing issues outnumbered declining ones on the NYSE by a 4.44-to-1 ratio; on Nasdaq, a 3.59-to-1 ratio favored advancers.

The S&P 500 posted 41 new 52-week highs and no new lows; the Nasdaq Composite recorded 45 new highs and 76 new lows.

Volume on U.S. exchanges was 10.62 billion shares, compared with the 10.19 billion average over the last 20 trading days.

Source(s): Reuters

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