New York: Wall Street ended sharply higher on Tuesday, bouncing back 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 US stock indexes gained more than 1% 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, and the Nasdaq posted its first gain in six.
"Its 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 US Treasury yields bounced back from five-month lows, in the wake of their biggest single-session decline since February in the prior session. This bolstered rate-vulnerable banks.
"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 doesnt happen with an economy thats supposed to be growing. Firming in the 10-year (yield) indicates that perhaps the economy isnt 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 doesnt take a whole lot of fear in some investors to create what we saw yesterday." For an interactive graphic on global vaccine deployment and availability, click here https://graphics.reuters.com/world-coronavirus-tracker-and-maps/vaccination-rollout-and-access.
Unofficially, the Dow Jones Industrial Average rose 550.48 points, or 1.62%, to 34,512.52, the S&P 500 gained 64.72 points, or 1.52%, to 4,323.21 and the Nasdaq Composite added 223.89 points, or 1.57%, to 14,498.88.
Second-quarter reporting season has hit full-stride, with 56 of the companies in the S&P 500 having posted results. Of those, 91% have beaten consensus, according to Refinitiv.
Analysts now see annual S&P earnings growth of 72.9% for the April-June period, a significant improvement over the 54% growth seen at the beginning of the quarter.
Asia tracks Wall Street
Asian stocks rose Wednesday in the wake of the biggest advance in U.S. equities since March as anxiety over the economic impact of coronavirus flareups eased. Treasury yields held gains.
An MSCI Inc. index of Asia-Pacific shares snapped a three-day drop as Japan, Australia and China climbed. U.S. equity futures edged higher after bargain hunters helped the S&P 500 to all but erase Monday's slide in a comeback for the reopening trade, led by cyclical sectors such as industrials and financials. A gauge of U.S. small caps jumped 3%.
The dollar was steady against major peers after advancing for a fourth day. Oil pared gains and Bitcoin held below the $30,000 level.
Spiking cases of the more contagious delta strain and curbs to fight infections in a range of nations spooked investors this week. But loose U.S. monetary policy, still-high levels of economic expansion and robust corporate earnings growth remain powerful props for sentiment, encouraging retail investors to buy dips in equities.