Fearing the spread of the more contagious variant of COVID-19, investors repurchased after the previous day’s plunge, and Wall Street stocks rose on Tuesday.
As of 1:43 pm Eastern Time (17:43 GMT), the S&P 500 index rose 1.5%, regaining most of Monday’s losses, the biggest drop since May.
The Dow Jones Industrial Average rose 558 points, or 1.7%, to 34,521; the Nasdaq Composite Index rose 1.6%. The Russell 2000 Index of small company stocks outpaced other major indexes with a 2.9% increase.
As investors try to figure out the lingering effects of the coronavirus on inflation, the broader economy, and businesses ranging from airlines to banks, the sharp one-day rebound in the market once again shows how unstable trading is. Even with all the volatility, the market still managed to continue to rise, with the benchmark S&P 500 index setting multiple records in the past few weeks.
The spread of the more contagious COVID-19 Delta variant has become a concern for investors and policymakers. The US Centers for Disease Control and Prevention stated that an estimated 83% of cases in the United States are related to the Delta variant of the virus. Although tens of millions of Americans are vaccinated, a large number of them are either reluctant or completely hostile to the idea of doing so.
As the infection rate in the area has risen rapidly again, the Los Angeles area re-regulated the rules for wearing masks indoors last weekend. Other parts of the country, such as southern Missouri, are flooded with COVID-19 cases, again straining hospitals.
Fearing that the strong economic recovery from the pandemic might be at risk due to more lockdowns or coronavirus cases, bond yields fell sharply on Monday. The 10-year US Treasury bond yield fell to 1.14% in early trading on Tuesday, but it has reversed, rising to 1.21% from 1.18% the day before. Just a week ago, the 10-year Treasury bond yield was 1.33%.
Yung-Yu Ma, chief investment strategist at BMO Wealth Management, said: “We have seen the situation experienced in the past few weeks more dramatic, and this is indeed the market looking for a statement.”
Investors are looking for any clues they can get to better gauge the continued trajectory of the economic recovery. Everything from the Fed’s comments to the outlook for company and economic data is used to get a clearer picture of the rest of the year and the state of the economy in 2022.
Wall Street is also in the earnings reporting season. IBM rose 1% after the company reported that its revenue and profits were better than expected, thanks to its cloud computing business. Hospital operator HCA Healthcare rose 14% after easily exceeding Wall Street’s second-quarter profit and revenue expectations.
In addition to the proceeds, after reports that they are about to reach a settlement of $26 billion in opioid lawsuits, drug distributors have taken some major steps. AmerisourceBergen rose 3.7% and McKesson rose 2.9%.
Paint and coatings manufacturer PPG Industries shares fell 4.6% after its second-quarter profit was lower than analysts’ expectations, and it was facing supply chain issues and rising raw material prices.