Stocks jumped on Tuesday, building on the strong performance from the previous session, on the back of broad market gains and solid economic data.
Apple and Microsoft rose 1.7% and 1.8%, respectively. Amazon rose 1.7% and Alphabet climbed 2.1%. Netflix gained 4.4% and Facebook traded higher by 2.8%. Tesla shares, meanwhile, popped 6.8% after surging more than 12% on Monday. Those sharp moves higher come after a sharp sell-off in Big Tech last week, which pressured the broader market.
Other parts of the market participated in Tuesday’s move higher. The S&P 500 real estate and utilities sectors were up more than 1%. Materials, industrials and energy were also higher.
“The market is doing its best to prove that buying the dip still is in vogue,” said Frank Cappelleri, executive director at Instinet. But “the bottom line is that the market continues to have broad participation And that’s the most crucial characteristic to maintain going forward.”
People walk by the New York Stock Exchange (NYSE) near One World Trade Center, the Freedom Tower, in lower Manhattan during commemoration ceremonies for the September 11, 2001 terror attacks on September 11, 2020 in New York City.
Spencer Platt | Getty Images
Stocks also got a boost after China reported its first retail sales increase for the year. The country’s National Bureau of Statistics said Chinese retail sales rose 0.5% in August. The Shanghai Composite closed 0.5% higher on Tuesday.
This puts China “on track to return to its pre-virus growth rate before the end of the year,” said Julian Evans-Pritchard, senior China economist at Capital Economics. “Retail sales surpassed 2019 levels for the first time since the COVID-19 outbreak, while investment and output growth continued to strengthen” last month.
In the U.S., the Empire State Manufacturing index came in at 17 for September, rebounding from a print of 3.7 in August. Economists polled by Dow Jones expected the index to come in at 7.
Tuesday’s gains came after a the major averages popped more than 1% on Monday, boosted by a slew of dealmaking activity and a rally in tech stocks. Hopes around a potential coronavirus vaccine also lifted sentiment on Monday.
Optimism about the United States getting a better handle on the virus was a major reason that LPL Financial raised its year-end target for the S&P 500 to a range of 3,450–3,500, said Jeff Buchbinder, an equity strategist at the firm. That target implies an upside of roughly 2% for the market over the rest of the year.
Buchbinder said that Monday’s rally was also fueled by the announcement of major deals in the tech space, including Nvidia’s move to buy Arm Holdings from Softbank for roughly $40 billion.
“Regardless of the situation, regardless of the sector, big commitments and big mergers tend to show confidence, and we would take those as positive signs,” Buchbinder said.