The Dow Jones Industrial Average climbed more than 800 points and the S&P 500 had its best day in more than two years Tuesday as the market clawed back more of the ground it lost in a miserable several weeks on Wall Street.
The S&P 500 rose 3.1%, its best day since May 2020, as all but five of the stocks in the index notched gains. The benchmark index has been rallying since hitting its lowest point of the year Friday to close out a September slump.
Twitter Inc. surged 22% after Elon Musk said he would go ahead with his $44 billion acquisition of the social media company, abandoning months of efforts to get out of the deal.
The Dow rose 2.8%, and the Nasdaq composite climbed 3.3% on Tuesday. Small company stocks also made solid gains, lifting the Russell 2000 3.9% higher. European and Asian markets also rose broadly on the day.
The market's gains come as major indexes remain in a bear market after falling 20% or more from their most recent record highs. The two-day rally is hitting markets as investors look for signs that central banks might ease up on aggressive rate increases aimed at taming the hottest inflation in four decades.
Investors in the U.S. received potentially encouraging news from a government report on job openings that showed the number of available jobs in the U.S. plummeted in August compared with July. It's a sign that businesses may pull back further on hiring and potentially cool chronically high inflation.
The optimism, however, could be misguided as inflation remains stubbornly hot, said John Lynch, chief investment officer for Comerica Wealth Management.
"Investors should be worried about false positives," Lynch said. "Be wary of the history of bear market rallies, they can be very seductive."
And major indexes are not free from trouble ahead, he said, as more economic data and the next round of earnings reports paint a clearer picture of how inflation continues to affect business operations and consumer spending.
The S&P 500 rose 112.50 points to 3,790.93, while the Dow gained 825.43 points to close at 30,316.32. The Nasdaq rose 360.98 points to 11,176.41, and the Russell 2000 added 66.90 points at 1,775.77.
Treasury yields have continued to pull back from multiyear highs, which has helped relieve some of the pressure on stocks. The yield on the 10-year Treasury, which helps set rates for mortgages and many other kinds of loans, slipped to 3.64% from 3.65% late Monday. It got as high as 4% last week after starting the year at just 1.51%.
The yield on the two-year Treasury, which more closely tracks expectations for Federal Reserve action, fell to 4.10% from 4.12% late Monday.
The market was mostly quiet with company news ahead of the next round of corporate earnings.
Cruise line operators were among the biggest gainers in the S&P 500. Norwegian Cruise Line Holdings Ltd. jumped 16.8%, Royal Caribbean Cruises Ltd. surged 16.7% and Carnival Corp. gained 13.3%.
Investors are watching closely as central banks raise interest rates to make borrowing more difficult and slow economic growth to try to tame inflation. Investors are hoping that they will eventually ease off their aggressive rate increases, and a move by Australia's central bank is a hopeful sign for some.
Australia's central bank made an interest rate increase that was smaller than previous ones and that helped Australia's market jump 3.8%.
In the U.S., Wall Street is worried that the rate increases, especially the increases from the Fed, could go too far in slowing growth and send economies into a recession. The Fed has already pushed its key overnight interest rate to a range of 3% to 3.25%, up from virtually zero as recently as March.
Economic growth is already slowing globally, and the U.S. economy contracted during the first two quarters of the year, which is considered an informal signal of a recession. The economy still has several strong pockets, however, including employment.
Wall Street will get a more detailed look at the employment situation in the U.S. this week, with a report on hiring by private companies due today , the latest tally of weekly applications for unemployment benefits due Thursday and the government's monthly jobs report for September due Friday.
If those reports point to a still strong job market, that could trigger a bond market sell-off, which would weigh on stocks, said Jay Hatfield, CEO of Infrastructure Capital Advisors.
"All those could hit the stock market because right now the bond market is really driving the stock market," he said.
Information for this article was contributed by Yuri Kageyama and Matt Ott of The Associated Press.