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 on Friday to close out a September slump.
Twitter surged 22.2% 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%. Small company stocks also made solid gains, lifting the Russell 2000 3.9% higher. European and Asian markets also rose broadly.
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 their aggressive rate hikes aimed at taming the hottest inflation in four decades.
Australia's central bank made an interest rate hike that was smaller than previous ones and that helped Australia's market jump 3.8%. It is a potentially positive signal for investors, along with the latest jobs data from the U.S.
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 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," he said. "Be wary of the history of bear market rallies, they can be very seductive."
Major indexes could be in store for more declines ahead, he said, as more economic data and the next round of earnings reports paints a clearer picture of how inflation continues to impact 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 360.97 points to 11,176.41 and the Russell 2000 added 66.90 points at 1,775.77.
Treasury yields continued to pull back from their 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 symbol for Twitter appears above a trading post on the floor of the New York Stock Exchange, Tuesday, Oct. 4, 2022. Trading in shares of Twitter was halted after the stock spiked on reports that Elon Musk would proceed with his $44 billion deal to buy the company after months of legal battles.(AP Photo/Seth Wenig)