Floor trading reopened at the New York Stock Exchange Tuesday. New York Governor Andrew Cuomo rang the opening bell, and traders exulted in cheers. It was the perfect setting for investors' unbridled enthusiasm about the markets.
The stock market rallied at the start of the shortened week after markets were closed for Memorial Day on Monday, with all three major indexes finishing higher.
The Dow closed up 530 points, or 2.2%, boosted by optimism about the continued gradual reopening of the economy and a new potential coronavirus vaccine. At its high, the index was up more than 700 points and climbed above 25,000 points, a level it hasn't closed at since March 10.
The S&P 500, which is the broadest measure of Wall Street, closed up 1.2%. The index climbed above 3,000 points, a point at which it hasn't closed above since early March -- but it slipped back below that level by the time the closing bell rang.
The Nasdaq Composite closed up only 0.2%, having given back most of its earlier gains.
Although the New York Stock Exchange is a largely symbolic site -- stocks trade digitally -- the reopening after an unprecedented two-month hiatus is signaling that some things are returning to normal. NYSE floor trading closed May 18 as the city shut down to limit the spread of coronavirus. It was the first time that the New York stock market operated entirely electronically.
The economy has been decimated by stay-at-home orders that forced businesses to close, put millions of people out of work and sent stocks tumbling into a bear market. Although the economy remains in the toilet, investors have decided to wear their rose-colored glasses lately.
Boosting markets' optimism Tuesday, US biotechnology company Novavax announced that it is starting a human trial for a Covid-19 vaccine candidate in Australia. The company's shares closed 4.5% higher , having pared earlier gains.
Also helping lift investors' spirits, Memorial Day travel was modestly higher than over the past several weeks, giving markets hope that business is starting to return to life. Travel and leisure companies are among Tuesday's best performers, as local economies continued to reopen gradually across America.
On the economic data front, American consumer confidence stabilized in May, according to a Conference Board report released Tuesday. The confidence index had plummeted to 85.7, its lowest level in nearly six years, in April -- but it recovered to 86.6 in May. While consumers' assessment of the present business and labor market conditions declined further, their short-term outlook improved, helped by the reopening of the economy.
But even as some economic data is beginning to point upward, there are still plenty of red flags.
The unemployment rate is at its worst since the Great Depression, with millions of Americans laid off or furloughed because of the pandemic. And while the decline in consumer confidence appears to have bottomed out, "the uneven path to recovery and potential second wave are likely to keep a cloud of uncertainty hanging over consumers' heads," said Lynn Franco, senior director of economic indicators at The Conference Board.
Meanwhile in Washington, policymakers pledged to continue to pump the economy full of stimulus to stave off a collapse.
On Friday, White House economic adviser Kevin Hassett said he expects Congress and President Trump to agree on a "fourth wave" of economic stimulus "sooner rather than later."
"Risk appetite has been improving for a good couple of months now, partly on hopes over a vaccine but mainly because of expectations that the massive central bank and government stimulus packages announced in response to Covid-19 pandemic will fuel a speedy recovery in demand," said Fawad Razaqzada, market analyst at ThinkMarkets.
All that positive sentiment in the market is weighing on traditionally safer bets like gold, the US dollar and US Treasury bonds.