U.S. stocks closed higher Tuesday, with the Dow industrials and the Nasdaq turning in their best session in months, as a surge in appetite for technology shares and health-care stocks underlined a measure of bullishness returning to markets after a rough patch.
Both the Dow and the S&P 500 logged their second straight daily gain, while the Nasdaq snapped a three-session skid.
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.69% rallied 196.14 points, or 0.9%, to close at 21,899.89, led higher by shares of Caterpillar Inc. /zigman2/quotes/203434128/composite CAT +0.11% Cisco Systems Inc. /zigman2/quotes/209509471/composite CSCO +1.12% , Boeing Co. /zigman2/quotes/208579720/composite BA +0.66% and Apple Inc. /zigman2/quotes/202934861/composite AAPL +0.91% . The blue-chip gauge posted its best daily point-and-percentage gain since April 25, according to FactSet data.
The S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.86% rose 24.14 points, or 1%, to finish at 2,452.51, for its biggest rise since Aug. 14. The day’s gains were broad, with ten out of 11 primary S&P 500 sectors rising. The biggest sector gainers were in tech /zigman2/quotes/204467551/composite XLB +0.36% , up 1.5%, while health care and materials /zigman2/quotes/207444675/composite XLK +0.87% , both gained 1.2%.
The tech-laden Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.79% rallied 84.35 points, or 1.4%, to close at 6,297.48, for its best single-session climb since June 28.
Volumes, however, were below average even for August. At the close 2.76 billion shares traded hands on the New York Stock Exchange, while 1.59 billion shares traded on the Nasdaq. For August, NYSE average daily volume is 3.16 billion shares, while Nasdaq average daily volume is 1.84 billion shares, according to Dow Jones data.
Stocks gained momentum following a Politico report that President Donald Trump’s top aides and congressional leaders are making progress on shaping a tax-reform plan.
Any progress on tax reform is a big part of Monday’s rally, said Ian Winer, head of the equities division at Wedbush Securities, in an interview. Stocks, however, also gained support from reports that Norway’s nearly $1 trillion sovereign-wealth fund, the world’s largest, was raising its exposure to stocks.
“With the sovereign fund of Norway raising its equity allocation to 70% from 60%, that’s a big deal when you’re talking about a $1 trillion fund,” said Winer, who added that this could ultimately signal a top for stocks, but that remains to be seen.
U.S. stock indexes are attempting to rally from successive weekly declines that have tested investor confidence in the market’s bull run, as political strife besetting President Donald Trump’s administration and the threat of military conflagrations in the Korean Peninsula rattles nerves.
David Morrison, market strategist at Spread Co, in a post online . said for now, “it looks as if traders are taking advantage of the recent selloff to buy the dips, in tried and tested manner.”
“The question is if it will work as well now as it has in the past,” he said.
Read: A problem for buy-the-dip investors: no dips to buy
Key moments from Trump's Afghanistan speech
President Donald Trump said U.S. policy in Afghanistan and South Asia will “change dramatically,” adding that he will push Pakistan to fight terrorism more effectively. Photo: Reuters
The resurgence, however, has reignited concerns about the buy-the-dip mentality that bears argue has helped to inflate equity values.