Wall Street ends higher on recovery hopes, Nasdaq hits another record
Wall Street’s three major indexes closed higher on Tuesday as improving economic data and the prospect of more stimulus bolstered hopes of a swift recovery, while a jump in technology shares powered the Nasdaq to another record high.
While all the indexes pared gains late in the session to close below their peaks for the day, the Nasdaq managed to register its fifth record high close this month. Apple Inc provided the biggest boost followed by Amazon.com and Microsoft.
Data showed that the pace of contraction in the U.S. manufacturing and services sectors slowed in June as businesses reopened after lockdowns that started in mid-March.
Also, new home sales jumped 16.6% in May, blowing past estimates of a 2.9% rise.
“The cumulative effect of the economic data we’ve been seeing is helping to support the V-shaped rally we’ve had in stocks,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
“It’s reinforcing views that equities can continue to advance even though there’s a fair amount of economic damage that’s going to loiter for some time to come, such as elevated unemployment readings and the slow recovery in travel, leisure and entertainment industries.”
Despite rising coronavirus cases, Luschini noted that the lack of appetite for further economic lockdowns among federal and state officials was likely cheering investors.
The mood may have been dampened a little by a New York Times report that European Union countries were prepared to block Americans from entering because the United States has failed to control the coronavirus pandemic.
But it helped that government officials were talking about further stimulus, Luschini added.
Then U.S. Treasury Secretary Steven Mnuchin said that the next stimulus bill will be focused on getting people back to work quickly and that he would consider a further delay of the tax filing deadline.
Earlier in the day White House economic adviser Lawrence Kudlow said tax rebates and direct mail checks are on the table in the next coronavirus relief bill.
The Dow Jones Industrial Average rose 131.14 points, or 0.5%, to 26,156.1, the S&P 500 gained 13.43 points, or 0.43%, to 3,131.29 and the Nasdaq Composite added 74.89 points, or 0.74%, to 10,131.37.
