U.S. stocks completed the fastest-ever return to a record after a drop of at least 20%, surpassing February highs for the first time since the pandemic upended financial markets.
The S&P 500 eked out a gain to 3,389.78, to cap a 52% rally from its March 23 low. The gauge had failed to breach that level in three of the past four sessions. Amazon.com Inc. paced the gains Tuesday, pushing its rally this year to 79%. Homebuilders also surged as a report showed housing starts rose the most since 2016. Lennar Corp. and D.R. Horton Inc. boasted returns of at least 148% since the stock-market bottom.
Massive stimulus injections and a surge in technology companies have driven the rebound in American stocks from a pandemic-induced sell-off. Daily coronavirus case counts, positive test rates and hospitalizations look to be improving — as evidence grows that the peak of the flareup across Sunbelt states is in the past. While stimulus talks have stalled, better-than-feared economic data and corporate earnings have instilled optimism that a recovery is taking shape.
"Momentum is currently positive as the actions of the Fed and other major central banks continue to drive yield-seeking investors into racier equities and away from bonds," said Fawad Razaqzada, an analyst at ThinkMarkets. "While things could look a lot different in the not-too-distant future, the short-term picture certainly looks bullish right now."
The S&P 500 headed toward its fifth straight month of gains, which would be the longest winning streak since September 2018. Since the gauge's March 23 bottom, all major groups have rallied, with consumer-discretionary and technology shares jumping at least 63%.
The fact that the benchmark is breaking through a record may be psychologically interesting, but these milestones should be taken in stride, according to Chris Larkin, managing director of trading and investment product at E*Trade Financial.
"It may hold some short-term importance for traders who have built this into their strategy, but for the most part, anybody participating in the market should look past these relatively arbitrary moves and focus more on fundamentals," he said.
As the S&P 500 pushes higher, one indicator may boost the confidence of equity bulls. The benchmark's cumulative advance-decline line is still near its peak. That signals broad participation is supporting the rally, as technical analysts often suggest breadth leads price, and any near-term pullback will be shallow and short.