Wall Street rallied for the third-straight day on Tuesday, after positive retail sales data boosted confidence in a swifter economic recovery, and a drug trial showed "breakthrough" results for COVID-19 treatment.
The Dow Jones Industrial Average closed 526 points higher, while the S&P 500 and the Nasdaq were both up by slightly less than 2 percent.
Monthly retail sales data released Tuesday morning from the Census Bureau showed a 17.7 percent increase, the biggest jump on record. Economists were expecting a gain of around 8 percent. The number contrasted strongly with the data for April, which showed the largest monthly drop ever, down 14.7 percent.
The surprising uptick boosted investor confidence in a "V-shaped" recovery, further lifting sentiment after the May jobs report showed a surprise gain of 2.5 million positions.
President Donald Trump was quick to tout Tuesday's retail gains, tweeting just minutes after the data was released, "Wow! May retail sales show biggest one-month increase of ALL TIME, up 17.7%. Far bigger than projected. Looks like a BIG DAY FOR THE STOCK MARKET, AND JOBS!"
The Dow had soared by almost 1,000 points earlier in the day on news of a promising coronavirus treatment that showed increased survival rates for patients on ventilators or oxygen.
“It will save lives, and it will do so at a remarkably low cost,” Martin Landray, an Oxford University professor co-leading the trial, told Reuters.
“It is a major breakthrough,” said Peter Horby, Professor of Emerging Infectious Diseases and Global Health at the University of Oxford and co-lead on the trial.
The drug is a readily available generic steroid that has been in use for about 50 years as an anti-inflammatory.
Market gains were pared later in the morning, after Federal Reserve Chairman Jerome Powell presented sobering testimony to the Senate Banking Committee as part of a semiannual update on the state of the economy. The central bank head characterized the timing and strength of the recovery as uncertain.
“The longer the downturn lasts, the greater the potential for longer-term damage from permanent job loss and business closures," Powell said, reiterating the message he delivered after last week's Federal Open Market Committee meeting. "Long periods of unemployment can erode workers’ skills and hurt their future job prospects.”
“I think there is going to be a large number of people who will not be able to immediately go back to work at their old job or even in their old industry," Powell said of the 44 million who have already filed for unemployment benefits.
Moreover, the burden of the downturn has not fallen equally, Powell said.
"Those least able to withstand the downturn have been affected most,” Powell said. "If not contained and reversed, the downturn could further widen gaps in economic well-being that the long expansion had made some progress in closing.”