BY MEDHA SINGH AND DEVIK JAIN
U.S. stocks jumped on Tuesday after a record rise in May retail sales revived hopes of a swift post-pandemic economic rebound, with sentiment also lifted by data showing reduced COVID-19 death rates in a trial of a generic steroid drug.
A Commerce Department report showed overall retail receipts rose 17.7% last month as Americans resumed spending after weeks of lockdown, although the rebound retraces only a fraction of the historic drops in March and April.
Retailers Kohl’s Corp and Nordstrom Inc surged 11% and 12%, respectively, leading gains on the S&P 500.
Results from a UK-led trial showed giving low doses of the generic steroid drug dexamethasone to patients admitted to hospital with COVID-19 reduced death rates by around a third among those with the most severe cases of infection.
“Looking at this morning’s number in aggregate, this is another indicator that a V-shaped recovery could be more likely than we initially thought,” said Mike Loewengart, managing director of investment strategy at E*TRADE Financial Corp.
“A potential COVID-19 steroid treatment in the UK combined with record retail sales and news of additional stimulus has been met with unbridled optimism.”
U.S. stocks ended a volatile session higher on Monday as the Federal Reserve said it would start buying corporate bonds to infuse liquidity. A report overnight said the Trump administration was preparing a nearly $1 trillion infrastructure proposal.
Investors will keep a close watch on a live telecast of Fed Chair Jerome Powell’s two-day testimony before the Congress, which is expected to begin at 10 a.m. ET.
Powell’s remarks are set to come after the U.S. central bank issued a grim outlook last week, sparking a pullback in a stock market rally that has powered the Nasdaq to fresh record highs.
The benchmark S&P 500 index is now about 7% below its record high hit four months earlier after coming within 5% of that level early last week.
At 9:40 a.m. ET, the Dow Jones Industrial Average was up 759.62 points, or 2.95%, at 26,522.78, the S&P 500 was up 79.87 points, or 2.60%, at 3,146.46. The Nasdaq Composite was up 203.36 points, or 2.09%, at 9,929.38.
All 11 S&P sub-indexes were trading higher, with economically-sensitive industrial, financial and materials climbing between 3.9% and 4.6%.
Caterpillar Inc jumped 7% and Boeing Co 7.8%, leading gains on the blue-chip Dow Jones.
Eli Lilly and Co jumped 11% after its breast cancer therapy Verzenio met the main goal of reducing the risk of it returning in the early stages in a late-stage study.
Advancing issues outnumbered decliners more than 13-to-1 on the NYSE and 7-to-1 on the Nasdaq.
The S&P index recorded three new 52-week highs and no new low, while the Nasdaq recorded 64 new highs and one new low.