An across-the-board rally drove the major U.S. stock indexes sharply higher Tuesday. Investors bought Amazon and Alphabet ahead of their earnings announcements. A sense of optimism over progress on a large fiscal stimulus package also helped boost investor sentiment.
Economically-sensitive financial and industrial stocks made the biggest advances.
The Dow and Nasdaq rose more than 1-and-a-half percent. The S&P 500 added 1.4%.
DataTrek Research co-founder Nick Colas says those cyclical and value stocks stand to gain the most when the economy rebounds.
“At this point, the recovery is gaining steam, and it should progress through the back half of the year. And you want to play the names where earnings surprises from economic exposure are going to peek out. That’s value. That’s cyclicals.”
Running in the other direction: heavily shorted stocks that had recently made stratospheric gains. GameStop lost 60% of its value. AMC and Koss plunged more than 40%.
After the markets closed, Amazon surprised Wall Street with the announcement that founder Jeff Bezos would step down as CEO in the third quarter and be replaced by Amazon Web Services head Andy Jassy. Bezos will become executive chair. The company also reported that quarterly profit more than doubled, crushing estimates, as net sales jumped 44%.
Shares of Alphabet shot 7% higher after hours. Quarterly sales at Google’s parent rose and beat estimates as advertising customers unleashed budgets for the holidays.