The DJIA gained 0.31%, while the S&P 500 advanced 0.26%
Investors shrug off new concerns about China’s economy and the Delta variant of the coronavirus to largely drive stocks higher while also boosting some more defensive investments.
Wall Street bounced back after early losses on Monday as two of its three major indices closed higher, with the S&P 500 posting a new record high. The Nasdaq was the only index to end the day lower.
The Dow Jones Industrial Average (DJIA) gained 110.02 points, or 0.31%, the S&P 500 advanced 0.26%, while the Nasdaq Composite shed 0.2%.
The MSCI world equity index dropped 1.24 points, or 0.17%.
The ability to shake off new concerns about the viability of a global economic comeback and chaotic images out of Afghanistan underscored the appeal of U.S. stocks, according to analysts.
I would have expected much more downside given a difficult weekend of geopolitical headlines in the Middle East and since the good news of earnings season is now behind us, said David Bahnsen, chief investment officer for The Bahnsen Group. The ‘there is no alternative’ trade is very resilient right now, which is benefiting U.S. stocks, as there simply aren’t attractive alternatives for stock investors outside of the U.S.
At the same time, there was increased investor demand for safe-haven investments such as gold, the dollar and U.S. Treasuries due to appetite for lower-risk avenues amid global uncertainty.
We still remain positive on the outlook and think rates trend higher and cyclical sectors have another leg of outperformance, but admittedly there are downside risks given the Delta variant, said Stephanie Roth, senior markets economist with J.P. Morgan Private Bank.
The dollar rose against a basket of six major currencies, gaining 0.1% to 92.623 after falling to a one-week low on Friday.
In more risk-off moves, U.S. Treasury yields dropped as demand for safe-haven U.S. bonds rose. Benchmark 10-year yields dropped four basis points to 1.256%, after hitting 1.223%. The yield curve between two- and 10-year notes flattened two basis points to 105 basis points.
Safe-haven sentiment also boosted gold, with spot gold rising 0.5% to $1,787 per ounce. U.S. gold futures added 0.6% at $1,789.
Muted investor appetite kicked off the week after figures on July retail sales, industrial production and urban investment in China were all lower than expected, a trend that is only likely to get worse given the recent tightening in coronavirus restrictions there.