Stocks finished firmly higher Tuesday, notching their second best day of 2019. The major averages rebounded amid easing trade tensions and hints of more accommodative Fed policy. The Dow climbed 512 points, while the S&P 500 advanced 2.1%, eclipsing its 200-day moving average. The Nasdaq Composite was up 2.7%, bouncing out of correction territory.
Federal Reserve comments provided a tailwind to equities, as Fed Chair Jerome Powell signaled an openness to cut interest rates if the economic outlook worsens, noting policymakers will “act as appropriate to sustain the expansion.” In geopolitical news, trade tensions eased following perceived conciliatory remarks from China. Sentiment was further lifted on hopes that President Trump’s plan to implement tariffs on Mexican goods may be prevented by lawmakers. This followed reports that Mexico is exploring retaliatory measures, but would prefer a negotiated solution before next week’s deadline.
Ten of 11 S&P 500 sectors closed in positive territory, with Real Estate the sole decliner. Tech shares rebounded more than 3%, while Materials and Financials also outperformed. Breadth was positive on issues by roughly 6:1 on the NYSE and 3:1 on the Nasdaq. Composite NYSE volume was more than 3.7 billion shares.
Treasuries declined from multi-year highs following the Fed comments. The yield on the 10-year note jumped five basis points to 2.12%. On the data front, factory orders slipped 0.8% in April, below the prior month’s downwardly revised 1.3% gain. Separately, durable goods orders fell 2.1% in April. In commodities, WTI crude added 0.6%, while COMEX gold edged 0.3% higher amid a weaker dollar.