Wall Street: S&P 500 ends best quarter since 1998 on a high note

The S&P 500 rallied on Tuesday to finish higher and secure its biggest quarterly percentage gain in more than two decades as improving economic data bolstered investor beliefs that a stimulus-backed rebound for the United States economy was on the horizon.

The Dow Jones Industrial Average rose 0.85 percent to close at 25,812.88. The S&P 500, a proxy for the health of US retirement and college savings accounts, gained 1.54 percent to finish at 3,100.29 while the tech-heavy Nasdaq Composite finished the day up 1.87 percent.

Coming off a drop of 20 percent in the first quarter, the biggest quarterly decline since the financial crisis in the fourth quarter of 2008, the S&P rallied more than 19 percent to notch its biggest quarterly gain since 1998, at the height of the tech boom.

Gains have been driven by unprecedented levels of fiscal and monetary stimulus and the easing of restrictions.

‘Highly uncertain’

But the S&P 500 is still down about 4 percent on the year, and gains in June stood just over 1 percent due to the flare-up in virus cases that has threatened to delay reopenings and derail a tentative economic recovery.

Federal Reserve Chairman Jerome Powell reiterated in comments on Tuesday that the path of the economy is “highly uncertain”.

“What everybody sees is if we can get something that puts an end to the spread or the spread becomes less, there is literally so much money out there that the Fed has put out there that when we turn, it is going to be a rocket ship the other way,” said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.

Still, comments from Anthony Fauci, the US government’s top infectious diseases expert, who said there was no guarantee the US will have an effective COVID-19 vaccine and warned the virus spread “could get very bad,” were a reminder that a full economic recovery could be a long road.

Gains were capped on the Dow, pressured by a drop in Boeing Co, as the planemaker gave back some of Monday’s 14 percent surge after Norwegian Air cancelled orders for 97 aircraft and said it would claim compensation.

Possible headwind

While coronavirus cases continue to surge in many states, the US economy is showing signs of picking up, with data indicating consumer confidence increased much more than expected in June.

Simmering US-China tensions also remained a possible headwind, with Washington beginning to eliminate Hong Kong’s special status under US law in response to China’s national security law for the territory. China said it would respond.

All of the 11 major S&P 500 sectors traded higher, with energy stocks leading the pack.

Micron Technology Inc jumped 3.9 percent as it forecast higher-than-expected current-quarter revenue on strong demand for its chips that power notebooks and data centres.

The company’s results also boosted other chipmakers and lifted the Philadelphia semiconductor index.
Uber rose after reports that the ride-hailing services company was in talks to buy food-delivery app Postmates.