S&P 500 has best day since June as stocks rally on Wall Street

Stocks rallied on Wall Street, pushing the S&P 500 to its biggest gain in nine months.

The 2.4% jump in the benchmark index Monday followed back-to-back weekly losses and came as investors were relieved to see long-term interest rates easing lower in the bond market. Higher interest rates can slow down economic growth and discourage borrowing.

Investors were also watching Washington, D.C., as a big economic stimulus bill advanced to the Senate. The yield on the 10-year Treasury fell to 1.43% after reaching its highest level in more than a year last week. Technology stocks and smaller companies led the way higher.

In a broad-based rally, the Nasdaq Composite jumped 3% while the Russell 2000 of small caps outperformed. GameStop Corp. added to last week’s surge of over 150%, with retail investors promoting the stock on social-media platforms such as Reddit and StockTwits.

Longer-dated Treasurys resumed their sell-off even as intermediate maturities found support, with traders priming themselves for how Federal Reserve officials slated to speak this week might respond to the recent tumult. Investors piled back into risk assets as stocks rebounded following a rout that was triggered by concern that massive stimulus as well as progress in battling the coronavirus have left some areas of the economy at risk of possibly overheating. The S&P 500 extended a rally from its March 2020 lows to about 75%.

“Equity investors are still looking at the rise in rates mostly as ‘a good thing’ and not yet as a threat, notwithstanding some shaking of the tree in high multiple stocks and other parts of the market last week,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group. “The benefits of the vaccines versus the challenge of higher rates will be the theme this year.”

Bitcoin rallied after a volatile weekend session, riding a broad resurgence in risk assets and a bullish report from Citigroup Inc. The bank’s strategists laid out a case for the digital asset to play a bigger role in the global financial system, saying the cryptocurrency could become “the currency of choice for international trade” in the years ahead.

The S&P 500 rose 90.67 points, or 2.4%, to 3,901.82. The Dow Jones Industrial Average rose 603.14 points, or 2%, to 31,535.51.

The Nasdaq rose 396.48 points, or 3%, to 13,588.83, and the Russell 2000 index of smaller companies rose 74.27 points, or 3.4% to 2,275.32.