U.S. stocks jumped on Tuesday on reports that President Donald Trump is preparing a $1 trillion program to upgrade infrastructure in order to reinvigorate the economy, while retail sales soared in May.
The Dow Jones Industrial Average gained 526.82 points to 26,289.98, while the S&P 500 rose 58.15 points to 3,124.74 and the Nasdaq Composite Index jumped 169.84 points to 9,895.87.
Tuesday’s volume on the New York Stock Exchange totaled 5.05 billion shares with 2,434 issues advancing, 44 setting new highs, and 560 declining, with one stock setting a new low .
Active movers were led by American Airlines Group Inc. (AAL), NIO Inc. (NIO) and Ford Motor Co. (F).
Bloomberg reported the Trump White House is planning a $1 trillion infrastructure proposal that will focus on roads and bridges, but also upgrade 5G wireless infrastructure and rural broadband.
U.S. retail sales surged by a record 17.7% in May, following a 14.7% plunge in April.
Trump cheered the data, tweeting: “Wow! May retail sales show biggest one-month increase of all time, up 17.7%. far bigger than projected. Looks like a big day for the stock market, and jobs!”
Reports also claimed that the widely available drug dexamethasone can help critically ill coronavirus patients.
“A potential Covid steroid treatment… combined with record retail sales and news of additional stimulus has been met with unbridled optimism,” said Mike Loewengart, a managing director at E-Trade. “We’ve been used to seeing record lows in economic fundamentals over the past few months and to see the pendulum swing so far in the other direction is nothing if not encouraging.”
Federal Reserve Chairman Jerome Powell said on Tuesday to the Senate Banking Committee that the central bank will adjust its corporate bond buying program according to market conditions.
“If the market function continues to improve, then we are happy to slow or even stop the purchases. If it goes the other way, we will increase,” Powell said. “I don’t see us as wanting to run through the bond market like an elephant … We want to be there if things turn bad in the economy.”
The National Association of Home Builders/Wells Fargo Housing Market Index, which measures homebuilder sentiment, surged 21 points in June to 58, the biggest monthly increase ever.
“As the nation reopens, housing is well-positioned to lead the economy forward,” said NAHB Chairman Dean Mon. “Inventory is tight, mortgage applications are increasing, interest rates are low and confidence is rising.”
But some geopolitical developments overseas were troubling.
South Korea confirmed that North Korea blew up an inter-Korean liaison office in the Gaesong Industrial Complex.
Three Indian soldiers were killed by Chinese forces during a violent confrontation along the disputed Himalayan border.
On Monday, investors welcomed an announcement by the Federal Reserve that it will buy individual corporate bonds.
“The size and the pace of Fed balance sheet expansion is something that will put a floor under global equity markets,” said Stephen Gallo, BMO Capital Markets head of European FX strategy.
Overnight in Asia, markets finished higher. The Shanghai Composite gained 1.44%; Hong Kong’s Hang Seng jumped 2.39%; while Japan’s Nikkei-225 surged 4.88%.
In Europe markets finished higher, as Britain’s FTSE-100 jumped 2.94%, while France’s CAC-40 gained 2.84% and Germany’s DAX surged 3.39%.
Crude oil futures gained 2.67% at $38.11 per barrel, Brent crude slipped 0.44% at $40.78. Gold futures rose 0.46%.
The euro slipped 0.57% at $1.126 while the pound sterling fell 0.29% at $1.2569.
The yield on the 10-year Treasury surged 7.69% to 0.756% while yield on the 30-year Treasury jumped 6.28% to 1.539%.