TOPLINE
Stocks are jumping sharply Tuesday morning thanks to a record surge in retail sales last month, additional support from the Federal Reserve and hopes for more government stimulus.
Stocks look set for a strong rally on Tuesday.
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KEY FACTS
The Dow Jones Industrial Average was up 3.1%, over 800 points, at Tuesday’s open, while the S&P 500 rose 2.6% and the tech-heavy Nasdaq Composite gained 2.1%.
Stocks continued to move higher, building on gains from Monday, after a record surge in retail sales last month.
Retail sales surged 17.7% in May, better than the 7.7% expected, as consumers getting out of coronavirus lockdowns began shopping again.
Shares of companies that would benefit from the economy reopening—including airlines, retailers and cruise operators—jumped again on Tuesday.
The market also got a boost after a report from Bloomberg on Monday said that the Trump administration is working on a $1 trillion infrastructure proposal.
Stocks fell by over 2% early on Monday, but erased losses and turned positive after the Federal Reserve announced that it would buy individual corporate bonds, taking yet another step to backstop financial markets and reassure investors.
Crucial quote
“This is yet another sign the Fed is going to do everything under their power to help liquidity,” says Ryan Detrick, senior market strategist for LPL Financial, about the Fed’s announcement on Monday. “Worries over a second wave? No worries, the Fed is here.”
Key background
Stocks continue to rebound from last Thursday’s massive sell-off, which was the Dow and S&P’s worst single-day losses since the coronavirus market plunge in March. Despite rallying on Friday, the market still posted its biggest weekly drop since March 20, when all the major indexes dropped at least 12% amid widespread economic shutdowns during the pandemic. Federal Reserve chairman Jerome Powell reiterated at his press conference on Wednesday that while “there is great uncertainty about the future,” the Central Bank is strongly committed to doing “whatever we can, for as long as it takes” to help support the economy.
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