Stocks jumped on Wall Street on Tuesday, regaining much of the ground they had lost a day earlier when concerns grew about the spread of cases of the more contagious version of COVID-19.
It was the latest rebound after the pullback as investors continue to try and assess how badly rising infections will affect the economic recovery.
The S&P 500 rose 1.5% a day after its biggest drop since May. Airlines and other stocks that sank the day before were back in the winning column. Technology, financial, industrial and health care stocks also driven a substantial portion of the benchmark index’s broad gains.
The Dow Jones Industrial Average rose 596 points, or 1.8%, to 34,563. A day earlier, the bluechip index had lost 728 points.
The Nasdaq Composite was up 1.8%, while the Russell 2000 Index of smaller company stocks outperformed other major indexes, gaining 3.3%.
The sharp one-day rebound for the broader market once again shows how choppy trading has been as investors try to gauge the impact of the lingering virus on inflation, the broader economy and businesses ranging from airlines to banks. The broader market has managed to gain ground even with all the churn, and the benchmark S&P 500 has set several records over the past few weeks.
The spread of the more contagious delta version of COVID-19 has become a concern for investors and policymakers. The Centers for Disease Control and Prevention states that an estimated 83% of cases in the US are linked to the Delta variant. While millions of Americans have been vaccinated, there remains a significant percentage of Americans who are reluctant or outright hostile to the idea of vaccination.
Los Angeles County reinstated an indoor mask mandate late last week as the region’s infection rate was climbing rapidly again. Other parts of the country, such as southern Missouri, are full of COVID cases that are once again causing tension in hospitals.
Bond yields fell sharply on Monday on fears that the strong economic recovery from the pandemic could be jeopardized by additional lockdowns or coronavirus cases. The yield on the 10-year Treasury note dipped as low as 1.14% early Tuesday, but has reversed course and is up to 1.21% from 1.18% a day earlier. A week ago it was trading at 1.42%.
Investors are looking for whatever clues they can to better gauge the continued trajectory of economic recovery. Everything from Federal Reserve comments to companies’ outlook and economic data is being used to get a clear picture of what the economy might look like for the rest of this year and into 2022.