NEW YORK (Reuters) – Wall Street surged on Tuesday as a record jump in retail sales indicated the U.S. economy is on the road to recovery, five months into its pandemic-inflicted recession.
All three major U.S. stock indexes were sharply higher, and on course for their third consecutive daily gains.
The Dow and the S&P remain about 11% and 8% below their respective record closing highs reached in February, while the tech-heavy Nasdaq hovers about 1% below its all-time closing high reached on June 10.
Data released by the Commerce Department showed retail sales jumped by a record 17.7% in May, blowing past the 8% increase analysts expected.
“We’re seeing pretty broad gains,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. “As the economy reopens, you’re going to see strong numbers but after that they’re going to peter out.”
“As (U.S. Federal Reserve Chair Jerome) Powell pointed out, we have a long way to go,” Cardillo added.
Indeed, at the beginning of his two-day testimony before Congress, Powell said, “Until the public is confident that the disease is contained, a full recovery is unlikely.”
With a resurgence of new COVID-19 cases in China and the United States, along with unabated progression of the pandemic in Latin America and elsewhere, it could take a while until that confidence finds a foothold.
But a UK-led drug trial showed low doses of generic steroid drug dexamethasone reduced COVID-19 death rates among the most severe cases.
The Dow Jones Industrial Average rose 577.73 points, or 2.24%, to 26,340.89, the S&P 500 gained 64.83 points, or 2.11%, to 3,131.42 and the Nasdaq Composite added 181.65 points, or 1.87%, to 9,907.67.
All 11 major sectors of the S&P 500 were well in the black, with healthcare leading the charge.
The upbeat retail sales data helped push S&P 500’s Retail index 2.3% higher, led by Nordstrom Inc and Kohl’s Corp, which surged by 14.9% and 7.7%, respectively.
Blue-chip industrial Caterpillar Inc jumped 5.1% while planemaker Boeing Co advanced 3.1%.
Shares of Eli Lilly and Co surged 16.4% after announcing its breast cancer therapy’s success in a late-stage study.
Oracle Corp was up 2.8% after Wells Fargo hiked its price target on the company’s shares ahead of its earnings release expected after the bell.
Advancing issues outnumbered declining ones on the NYSE by a 5.32-to-1 ratio; on Nasdaq, a 3.35-to-1 ratio favored advancers.
The S&P 500 posted seven new 52-week highs and no new lows; the Nasdaq Composite recorded 96 new highs and five new lows.