U.S. stocks surge to notch best quarter since 1998

U.S. stocks climbed on the final day of the best quarter since 1998 as investors assessed better-than-estimated economic data amid concern over new coronavirus cases and trade relations with China.

The S&P 500 extended its second-quarter rally to 20% as a report showed consumer confidence posted its biggest increase since 2011. The tech-heavy Nasdaq Composite Index soared 31% in the span, the most since 1999, while the Dow Jones industrial average jumped 18% and notched its best quarter in 33 years. Treasurys and the dollar fell. Gold traded near $1,800 an ounce.

Optimism has been shaken as accelerating virus infections threaten to set back reopenings and, with them, any economic progress. New cases could rise to 100,000 a day if behaviors don’t change, infectious-disease expert Anthony Fauci said. Federal Reserve Chairman Jerome Powell stressed to Congress Tuesday that getting the coronavirus under control was vital as the U.S. economy rebound. After massive monetary and fiscal policy stimulus, signs that the crisis may linger longer will probably increase pressure for more aid.

“The downside has become more limited given how many investors missed the rebound, how many remain bearish and how much cash has been sitting on the sidelines,” wrote Esty Dwek, head of global market strategy for Natixis Investment Managers. “Coupled with abundant stimulus measures and liquidity, corrections are likely to be bought. That said, we remain prudent and believe it is too early to add a lot of risk to portfolios.”

Equities briefly pared gains Tuesday after the Federal Communications Commission designated Huawei Technologies Co. and ZTE Corp. as national security threats. Traders also monitored news that Hong Kong for the first time banned its biggest annual protest march, a decision attributed to outbreak-control measures that comes after Chinese lawmakers approved sweeping national security legislation for the former British colony.

Optimism for reopenings and an economic recovery helped consumer-discretionary stocks in the S&P 500 surge the most ever in the second quarter. Technology shares surged 30%, while utilities underperformed.

In terms of what’s ahead, “stocks moved into a second phase of recovery in June, where slower and choppier gains are more likely to occur as Fed-driven valuation expansion gives way to economic and earnings progress as the primary driver of returns,” said Bloomberg Intelligence’s Gina Martin Adams.

These are some of the main moves in markets:

Stocks

– The S&P 500 jumped 1.5% as of 4 p.m. EDT.

– The Dow Jones industrial average advanced 0.8%.

– The Nasdaq Composite Index surged 1.9%.

– The Stoxx Europe 600 Index increased 0.1%.

– The MSCI Asia Pacific Index advanced 0.7%.

Currencies

– The Bloomberg Dollar Spot Index fell 0.2%.

– The euro dipped 0.1% to $1.1232.

– The Japanese yen depreciated 0.3% to 107.95 per dollar.

Bonds

– The yield on 10-year Treasurys jumped three basis points to 0.66%.

– Germany’s 10-year yield advanced two basis points to -0.45%.

– Britain’s 10-year yield increased one basis point to 0.172%.

Commodities

– The Bloomberg Commodity Index advanced 1.1%.

– West Texas Intermediate crude dipped 0.9% to $39.35 a barrel.

– Gold climbed 1% to $1,798.80 an ounce.

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