On Tuesday, both factors were on display. Stocks initially rose more than 2 percent, after data showed that retail sales jumped 18 percent in May, a stronger than expected rebound. It was the biggest jump on record, after the biggest-ever collapse the previous month. Even after the surge in May, retail sales remain 8 percent below their February level, “indicating that the recovery in consumption is only partial at this stage,” wrote analysts with Oxford Economics.
Retail stocks like Nordstrom, Kohl’s, Gap and L Brands rose in early trading. Bulls were also heartened by news that scientists at the University of Oxford said on Tuesday that a 6,000-patient trial in Britain showed that a low-cost steroid, dexamethasone, could reduce deaths significantly for hospitalized Covid-19 patients.
That optimism helped lift share prices for companies in industries especially exposed to the virus. Airlines, cruise lines and casino companies rose.
The bounce on Tuesday followed a sudden swing in sentiment on Monday, after the Federal Reserve announced that it would start to buy corporate debt issued by individual firms. The Fed chair, Jerome H. Powell, said Tuesday that while the corporate bond market had calmed considerably, the central bank must follow-through on its prior announcements.
“I don’t see us as wanting to run through the bond market like an elephant, doing things and snuffing out price signals and things like that,” Mr. Powell said. “We just want to be there if things turn bad in the economy or if things go in a negative direction.”
Traders were also reacting to a Bloomberg News report that the Trump administration was considering $1 trillion in infrastructure spending to help the economy rebound. Infrastructure related shares such as Caterpillar and asphalt maker Vulcan Materials and crushed stone and aggregate producer Martin Marietta Materials rose.
But a series of updates about coronavirus cases undermined some of that optimism.
China reported 27 new cases in Beijing, where there has been a fresh outbreak, and the government reimposed some travel restrictions and locked down some residential areas in the city as it fought to contain the infections. In the United States, coronavirus cases in Florida and Texas continued to spike.