Dow ends up 2pc as US stocks rally on strong retail sales

NEW YORK: Wall Street stocks surged Tuesday following better-than-expected US retail sales data that boosted hopes the economy will recover more quickly than some economists expect.

The Dow Jones Industrial Average climbed 2.0 percent, gaining around 525 points, to close at 26,289.98.

The broad-based S&P 500 rose 1.9 percent to 3,124.74, while the tech-rich Nasdaq Composite Index advanced 1.8 percent to 9,895.87.

US retail sales posted a surprise spike of 17.7 percent in May, outperforming expectations much as the strong May jobs report left analysts scratching their heads.

Adding to the positive sentiment, a study at Oxford University showed use of the steroid dexamethasone cut risk of death for people on ventilators from 40 to 28 percent.

During the first of two days of congressional testimony, Federal Reserve Chair Jerome Powell vowed to maintain aggressive stimulus efforts in light of the hit from coronavirus shutdowns, but said Congress may need to do more as well.

"A full recovery is unlikely" unless consumers feel confident COVID-19 has been defeated, said Powell, who has been cautious about making too much of improving data in light of high unemployment levels and warned the recovery remains shrouded in "significant uncertainty."

Stocks have now gained three sessions in a row after suffering a rout last Thursday following data showing upticks in coronavirus cases in several states.

Analysts say the gains point to a strong tendency of investors to bargain hunt when stocks pullback.

"A 'buy the dip' mentality appears to be back," said JJ Kinahan, chief market strategist at TD Ameritrade.