U.S. stocks rose for a second day, but faded near the closing of the market as concern mounted that a spike in virus cases in some states could curtail economic activity. Gold rallied to its best level since 2012.
The S&P 500 jumped as much as 1.2% before paring the gain by two-thirds on reports that spiking cases in several hotspots in the South and Southwest threatened to derail plans to ramp up reopening. The Nasdaq Composite hit an all-time high, with investors keying on signs of continued economic growth and the idea that any setback will be met with increased government spending and Federal Reserve moves.
The S&P 500 Index rose 0.4%, to 3,131. The Dow Jones industrial average rose 0.5%, to 26,194. The Nasdaq composite index gained 0.8%, to 10,131, hitting the highest on record with its eighth consecutive advance and the largest advance in a week.
Stimulus “puts the bottom on bad news,” said Nela Richardson, an investment strategist at Edward Jones. “Bad news isn’t so bad if we think that that means more stimulus. The markets are responding also to the quick action, quickest in any recession going back to the Great Depression, of the Federal government and monetary authorities, not just in the United States, but around the world.”
Apple, Amazon and Facebook jumped at least 2%. Mohawk Industries, which provides home flooring, Darden Restaurants and Live Nation were among leaders in the S&P 500.
Treasurys were little changed, with the 10-year yielding around 0.71%, while the dollar dropped for a second day. Equities rose in Europe and in Asia. Gold pushed to its highest level since 2012, and oil topped $41 a barrel in New York.
Carmakers and banks led a broad advance in the Stoxx Europe 600 index after positive economic data in the euro area. The euro strengthened and yields ticked higher on core European bonds.
Investors are betting that trillions of dollars in stimulus by central banks and governments around the globe will shield economies from a resurgence in virus breakouts. PMIs for June, showed business activity in the world’s largest economy continuing a rebound that started in May.
While euro-area PMI gauges earlier fueled a risk-on mood, they also underlined some of the pressures that a long and slow recovery would impose on companies struggling with weak demand.
Anthony Fauci, the U.S.’s top infectious-disease doctor, warned Tuesday that the coronavirus isn’t taking a summer break, judging from its persistent spread in the U.S. Sun Belt. A German state locked down a municipality where 1,553 workers tested positive at a single meat factory.