Stocks closed broadly higher on Wall Street on Tuesday, regaining their footing a day after suffering their worst loss in months amid the worsening pandemic and potentially market-moving Senate elections.
The S&P 500 rose 0.7 percent, recovering about half of the index’s losses from a day earlier. The majority of big stocks in the S&P 500 notched gains, with oil producers leading the way as crude prices strengthened. Stocks of smaller companies did even better than the broader market, driving the Russell 2000 index of small-caps to a market-leading 1.7 percent gain. Treasury yields rose.
The market’s moves were tenuous early on, though. At one point, the S&P 500 gave up all of an early-morning rise and was down 0.2 percent even after a report showed U.S. manufacturing grew last month at its strongest rate since 2018.
The S&P 500 rose 26.21 points to 3,726.86. The Dow Jones Industrial Average gained 167.71 points, or 0.6 percent, to 30,391.60. The Nasdaq composite picked up 120.51 points, or 1 percent, to 12,818.96. The Russell 2000 climbed 33.19 points to 1,979.11.
Wall Street’s uneven start to the year comes as investors remain optimistic the economy will recover this year as more Americans receive coronavirus vaccinations. Optimism is being kept in check as new infections climb at frightening rates around the world, threatening to bring more lockdown orders that would punish the economy.
Traders have also focused on the outcome of the runoff elections Tuesday in Georgia, which will determine which party controls the Senate. Some analysts said the results could mark clear winners and losers in the stock market.
The general thinking is a Democratic sweep would open the door to higher tax rates, tougher regulation on businesses and other potentially profit-crimping changes from Washington. That would put broad pressure on the stock market, with Big Tech stocks in particular perhaps attracting more regulatory scrutiny.
However, Democratic control of the Senate, White House and House of Representatives could also make another dose of big financial support for the economy more likely. Democrats have lobbied for $2,000 cash payments to go to most Americans, for example, and they could push for more spending on infrastructure projects.
Such stimulus could eventually lead to higher inflation across the economy, something that has been nearly nonexistent for years. Increasing inflation expectations have helped buoy Treasury yields recently, and the yield on the 10-year Treasury rose to 0.95 percent from 0.90 percent late Monday.