NEW YORK: Wall Street's three major indexes closed higher on Tuesday as improving economic data and the prospect of more stimulus bolstered hopes of a swift recovery, while a jump in technology shares powered the Nasdaq to another record high.
While all the indexes pared gains late in the session to close below their peaks for the day, the Nasdaq managed to register its fifth record high close this month. Apple Inc provided the biggest boost followed by Amazon.com and Microsoft.
Data showed that the pace of contraction in the US manufacturing and services sectors slowed in June as businesses reopened after lockdowns that started in mid-March.
Also, new home sales jumped 16.6% in May, blowing past estimates of a 2.9% rise.
"The cumulative effect of the economic data we've been seeing is helping to support the V-shaped rally we've had in stocks," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
The mood may have been dampened a little by a New York Times report that European Union countries were prepared to block Americans from entering because the United States has failed to control the coronavirus pandemic.
But it helped that government officials were talking about further stimulus, Luschini added.
Then US Treasury Secretary Steven Mnuchin said that the next stimulus bill will be focused on getting people back to work quickly and that he would consider a further delay of the tax filing deadline.
Earlier in the day White House economic adviser Lawrence Kudlow said tax rebates and direct mail checks are on the table in the next coronavirus relief bill.
The Dow Jones Industrial Average rose 131.14 points, or 0.5%, to 26,156.1, the S&P 500 gained 13.43 points, or 0.43%, to 3,131.29 and the Nasdaq Composite added 74.89 points, or 0.74%, to 10,131.37.
Seven of the 11 major sub-indexes were higher with consumer discretionary and technology posting the steepest gains. Industrials ended the day unchanged.
The defensive utilities, real estate and consumer staples sectors slipped as investors felt more comfortable taking riskier bets.
It also helped that at least three brokerages raised their price targets for Apple's stock, and UBS raised its iPhone shipment estimates a day after the iPhone maker said it would use its own chips for Mac computers.
Nike Inc rose 2.4% as brokerages raised their price targets ahead of quarterly results on Thursday.
Spirit AeroSystems Holdings fell 13.3% after the company, which is Boeing Co's top supplier, said it was seeking relief from lenders as its finances were stretched by the Covid-19 pandemic and a 737 MAX production halt.
Advancing issues outnumbered declining ones on the NYSE by a 1.53-to-1 ratio; on Nasdaq, a 1.22-to-1 ratio favoured advancers.
The S&P 500 posted 25 new 52-week highs and no new lows; the Nasdaq Composite recorded 142 new highs and eight new lows.
On US exchanges 12.07 billion shares changed hands compared with the 13.29 billion average for the last 20 sessions.
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