US stocks have jumped after a record rise in May retail sales revived hopes of a swift post-pandemic economic rebound, with sentiment also lifted by data showing reduced COVID-19 death rates in a trial of a generic steroid drug.
A Commerce Department report showed overall retail receipts rose 17.7 per cent last month as Americans resumed spending after weeks of lockdown, although the rebound retraces only a fraction of the historic drops in March and April.
Retailers Kohl’s and Nordstrom surged 11 per cent and 12 per cent, respectively, leading gains on the S&P 500 on Tuesday.
Results from a UK-led trial showed giving low doses of the generic steroid drug dexamethasone to patients admitted to hospital with COVID-19 reduced death rates by around a third among those with the most severe cases of infection.
Mike Loewengart, managing director of investment strategy at E*TRADE Financial Corp, said hopes for a fast economic recovery had increased.
“Looking at this morning’s number in aggregate, this is another indicator that a V-shaped recovery could be more likely than we initially thought,” he said.
“A potential COVID-19 steroid treatment in the UK combined with record retail sales and news of additional stimulus has been met with unbridled optimism.”
US stocks ended a volatile session higher on Monday as the Federal Reserve said it would start buying corporate bonds to infuse liquidity. A report overnight said the Trump administration was preparing a nearly $US1 trillion infrastructure proposal.
Investors will keep a close watch on a live telecast of Fed Chair Jerome Powell’s two-day testimony before the Congress, which is expected to begin at 10am local time.
Powell’s remarks are set to come after the US central bank issued a grim outlook last week, sparking a pullback in a stock market rally that has powered the Nasdaq to fresh record highs.
The benchmark S&P 500 index is now about seven per cent below its record high hit four months earlier after coming within five per cent of that level early last week.
At 9.40am local time, the Dow Jones Industrial Average was up 759.62 points, or 2.95 per cent, at 26,522.78, the S&P 500 was up 79.87 points, or 2.60 per cent, at 3,146.46. The Nasdaq Composite was up 203.36 points, or 2.09 per cent, at 9,929.38.
All 11 S&P sub-indexes were trading higher, with economically-sensitive industrial, financial and materials climbing between 3.9 per cent and 4.6 per cent.
Caterpillar jumped seven per cent and Boeing 7.8 per cent, leading gains on the blue-chip Dow Jones.
Eli Lilly jumped 11 per cent after its breast cancer therapy Verzenio met the main goal of reducing the risk of it returning in the early stages in a late-stage study.
Advancing issues outnumbered decliners more than 13-to-1 on the NYSE and 7-to-1 on the Nasdaq.
The S&P index recorded three new 52-week highs and no new low, while the Nasdaq recorded 64 new highs and one new low.