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By Stephen Culp
NEW YORK, June 16 (Reuters) - Wall Street advanced on Tuesday as the prospect of additional stimulus and a record jump in retail sales suggested the U.S. economy could bounce back sooner than expected, five months into its pandemic-inflicted recession.
All three major U.S. stock indexes posted their third consecutive daily gains.
Data released by the Commerce Department showed retail sales jumped by a record 17.7% in May, blowing past the 8% increase analysts expected.
Investor risk appetite was given a further boost by the Trump administration’s anticipated $1 trillion dollar infrastructure package aimed at jump-starting the economy.
“The retail sales numbers is the story that’s driving markets higher,” said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina. “But the smell of stimulus in the air is adding to today’s gains for sure.”
Amid a resurgence of new COVID-19 cases in China and the United States, along with unabated progression of the pandemic in Latin America and elsewhere, a UK-led drug trial showed low doses of generic steroid drug dexamethasone reduced COVID-19 death rates among the most severe cases.
“We got potentially more positive news in the fight against COVID-19,” Detrick added. “But while COVID is in most peoples’ minds, in the stock market’s view it is all about reopening and the strong data suggest the recovery is happening and faster than most expected.”
At the beginning of his two-day testimony before Congress, Federal Reserve Chairman Jerome Powell said, “Until the public is confident that the disease is contained, a full recovery is unlikely.”
Unofficially, the Dow Jones Industrial Average rose 543.68 points, or 2.11%, to 26,306.84, the S&P 500 gained 60 points, or 1.96%, to 3,126.59 and the Nasdaq Composite added 173.38 points, or 1.78%, to 9,899.40.
Much stronger than expected homebuilder sentiment helped home improvement retailer Home Depot Inc provide one of the biggest boost to the blue-chip Dow.
Shares of Eli Lilly and Co surged after announcing its breast cancer therapy’s success in a late-stage study.
Oracle Corp advanced after Wells Fargo hiked its price target on the company’s shares ahead of its earnings release expected after the bell. (Reporting by Stephen Culp; Editing by Cynthia Osterman)