Wall Street closes higher on signs of economic recovery

Wall Street advanced on Tuesday as the prospect of additional stimulus and a record jump in retail sales suggested the U.S. economy could bounce back sooner than expected, five months into its pandemic-inflicted recession. All three major U.S. stock indexes posted their third consecutive daily gains.

The Dow and the S&P remain about 11% and 8% below their respective record closing highs reached in February, while the tech-heavy Nasdaq hovers about 1% below its all-time closing high reached on June 10. Data released by the Commerce Department showed retail sales jumped by a record 17.7% in May, blowing past the 8% increase analysts expected.

Investor risk appetite was given a further boost by the Trump administration`s anticipated $1 trillion dollar infrastructure package aimed at jump-starting the economy.

"The retail sales numbers is the story that`s driving markets higher," said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina. "But the smell of stimulus in the air is adding to today`s gains for sure."

Amid a resurgence of new COVID-19 cases in China and the United States, along with unabated progression of the pandemic in Latin America and elsewhere, a UK-led drug trial showed low doses of generic steroid drug dexamethasone reduced COVID-19 death rates among the most severe cases.

"We got potentially more positive news in the fight against COVID-19," Detrick added. "But while COVID is in most peoples` minds, in the stock market`s view it is all about reopening and the strong data suggest the recovery is happening and faster than most expected."

At the beginning of his two-day testimony before Congress, Federal Reserve Chairman Jerome Powell said, "Until the public is confident that the disease is contained, a full recovery is unlikely."

The Dow Jones Industrial Average <.DJI> rose 526.82 points, or 2.04%, to 26,289.98, the S&P 500 <.SPX> gained 58.15 points, or 1.90%, to 3,124.74 and the Nasdaq Composite <.IXIC> added 169.84 points, or 1.75%, to 9,895.87.

All 11 major sectors of the S&P 500 ended the session well in the black, with energy <.SPNY> and healthcare <.SPXHC> leading the charge.

The upbeat retail sales data helped push S&P 500`s Retail index <.SPXRT> 2.3% higher, led by Nordstrom Inc and Kohls Corp , which surged by 12.9% and 9.0%, respectively.

Much stronger than expected homebuilder sentiment data helped home improvement retailer Home Depot Inc provide among the biggest boosts to the blue-chip Dow. Its shares rose 3.6%.

Shares of Eli Lilly and Co surged 15.7% after announcing its breast cancer therapy`s success in a late-stage study.

Oracle Corp was up 2.5% after Wells Fargo hiked its price target on the company`s shares ahead of its earnings release expected after the bell.

Streaming platform Roku Inc rose 12.4% in heavy volume, with no clear impetus, and the company declined to comment.

Advancing issues outnumbered declining ones on the NYSE by a 4.42-to-1 ratio; on Nasdaq, a 3.05-to-1 ratio favored advancers.

The S&P 500 posted seven new 52-week highs and no new lows; the Nasdaq Composite recorded 97 new highs and seven new lows.

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Volume on U.S. exchanges was 12.87 billion shares, compared with the 12.95 billion average over the last 20 trading days.