Wall Street stocks rebounded on Tuesday, led by a jump in Amazon.com, even as a likely delay in new fiscal stimulus by Congress and an increase in the number of coronavirus cases dampened hopes of a faster economic recovery.
Amazon.com Inc jumped 5.7% after Bernstein upgraded the stock to “outperform,” saying the company will continue to receive a boost from premium subscribers and third-party merchants even once the pandemic is contained.
Microsoft Corp, Apple Inc, Alphabet Inc and Facebook Inc, which have fueled Wall Street’s rally since the pandemic slammed markets in March, all rose more than 1.6%. They had carried the brunt of recent declines.
“The market is looking for some stability. Once again investors and traders are going to look to names that had gotten unduly beaten up,” said Kenny Polcari, chief market strategist at SlateStone Wealth LLC in Jupiter, Florida.
Seven of the 11 major S&P 500 sector indexes closed higher, led by information technology .SPLRCT and consumer discretionary .SPLRCD.
U.S. stocks on Monday extended a three-week losing streak as fears of a new round of lockdowns in Europe and the stalemate in Congress over the size and shape of another coronavirus-response bill dented hopes of a swift economic recovery.
“We have some fears about a number of different things that hurt the near-term growth outlook,” said Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis, who also cited the Federal Reserve’s cautious economic outlook.
“These are short-term fears that will go away because I think there’s quite a bit of undertow to the upside,” he said.
The Centers for Disease Control and Prevention on Tuesday reported 6,825,697 new coronavirus cases and said that the number of deaths had risen by 438 to 199,462.
The benchmark S&P 500 .SPX on Monday closed almost 9% below the record high hit Sept. 2, putting it a little more than a percentage point away from sliding into correction territory.
Investors are now bracing for an extended period of market volatility on concerns over growing political uncertainty in Washington that has been sharpened by the death last week of Supreme Court Justice Ruth Bader Ginsburg.
“All the political energies are going to be directed towards the next Supreme Court nomination. I don’t see them paying attention to that and pushing stimulus through at the same time,” said Mike Zigmont, head of trading and research at Harvest Volatility Management in New York.
Fed Chair Jerome Powell on Tuesday told a congressional panel that the economy had shown “marked improvement” since the pandemic drove it into recession, but the path ahead remains uncertain and the U.S. central bank will do more if needed.
Chicago Fed President Charles Evans also warned that the economy risks a longer, slower recovery, if not another outright recession, if Congress fails to pass more stimulus.
The Dow Jones Industrial Average rose 140.48 points, or 0.52%, to 27,288.18. The S&P 500 gained 34.51 points, or 1.05%, to 3,315.57 and the Nasdaq Composite added 184.84 points, or 1.71%, to 10,963.64.
Tesla Inc TSLA.O fell 5.6% after Chief Executive Elon Musk warned about the difficulties of speeding up production as an expert cautioned that the electric carmaker’s increased reliance on large-scale aluminum parts could bring new manufacturing challenges. Tesla’s slide weighed the most among declining shares on the Nasdaq.
Oracle Corp slipped 0.3% following a report by a state-backed Chinese newspaper that Beijing was unlikely to approve a proposed deal by the software maker and Walmart WMT.N for ByteDance’s TikTok.
Volume on U.S. exchanges was 8.68 billion shares, down from 10.62 billion shares on Monday.
Advancing issues outnumbered declining ones on the NYSE by a 1.25-to-1 ratio; on Nasdaq, it was a 1.00-to-1 ratio.
The S&P 500 posted two new 52-week highs and no new lows; the Nasdaq Composite recorded 30 new highs and 50 new lows.
