U.S. stocks moved higher on Tuesday and the S&P 500 set a new record high as broad market strength outweighed the travel names held back by Covid fears.
The Dow Jones Industrial Average jumped 278.24 points, or 0.8%, to close at 35,116.40 after briefly falling more than 100 points earlier in the session. The S&P 500 gained 0.8% to notch a new all-time closing high of 4,423.15, while the Nasdaq Composite added about 0.6% to settle at 14,761.29. The Dow is within 0.5% of a record.
Tuesday's move for stocks served as something of a mirror image to Monday's market action, which saw a late-day slump drag the Dow and S&P 500 into the red while the tech-heavy Nasdaq held on to a meager gain.
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That sort of day-to-day volatility is to be expected after the strong run for stocks since spring of last year, said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research.
"Everyone knows that valuations are fairly high. The S&P 500 is up nearly 100% since the March low of last year. … So the market tends to be a little skittish to any kind of news right now," Frederick said. "My outlook for most of Q3 has been that I've been expecting the market to be mostly sideways with slightly elevated volatility."
The 10-year Treasury yield stabilized on Tuesday after falling back to near five-month lows on Monday. As yields rebounded from their decline midday back to the unchanged mark, stocks rose.
The Dow was bolstered by stocks tied to the economic recovery, including banks and industrial companies like Caterpillar and 3M. Health care stocks such as Amgen and Johnson & Johnson outperformed as well. In the technology sector, Apple and IBM rose nearly 1.3% and 1.9%, respectively.
On the other hand, shares of companies that would be hit hardest by potential new health restrictions, including airlines and cruise lines, fell on Tuesday, limiting upside for the market.
The spread of the delta coronavirus variant continued to cloud the outlook for the economy. The seven-day average of daily coronavirus cases in the U.S. reached 72,790 on Friday, surpassing the peak seen last summer when the nation didn't have an authorized Covid-19 vaccine, according to data compiled by the Centers for Disease Control and Prevention.
However, on the positive side, the U.S. reached the 70% Covid vaccine milestone, according to the CDC.
"The delta variant of the virus is now rapidly spreading in the U.S. and a modest pullback in activity can't be ruled out," Solita Marcelli, CIO Americas at UBS, said in a note. "But any potential slowdown should be somewhat muted."
Oil stocks moved higher were another source of strength, even as the price of West Texas Intermediate crude drifted down to about $70 per barrel. Adam Karpf, a managing director at CIBC Private Wealth focused on energy, said the move in oil was due more to trading patterns than the delta variant taking a major bite out of global growth.
"Assuming that this will be kept under control ... we've had several months and weeks of a strong crude oil market and energy industry, and this is a breather," Karpf said.
One notable outperformer on Tuesday was retail brokerage Robinhood, which closed about 24% higher and pushed well above its first price from its initial public offering last week.
Meanwhile, the second-quarter earnings season continues with Under Armour shares rising 7.5% after the company beat estimates on the top and bottom lines. However, Clorox's stock fell more than 9% after a disappointing report.
Shares of Simon Property jumped 2.5% after the mall owner said sales bounced back to pre-pandemic levels, up 80% from a year ago. It also reported a relatively high occupancy rate.
Through Friday, 88% of S&P 500 companies had reported a positive earnings surprise for the second quarter, which will mark the highest percentage since FactSet began tracking this metric in 2008.