NEW YORK (TheStreet) -- What a difference a day makes. Stock closed higher as investors bet the Federal Reserve will delay its looming rate hike as Greece flirts with default.
The S&P 500 rose 0.26%, the Dow Jones Industrial Average gained 0.13% and the Nasdaq increased 0.57%, following a major selloff in all the indices on Monday, when the Dow lost 350 points.
For the quarter, the Dow is down 0.9% and 1.15% for the year. The S&P 500 fell 0.24% during the second quarter, but rose 0.2% year-to-date. The Nasdaq rose 1.8% quarter-to-date and 5.3% for the year.
"The situation in Greece has the potential to delay a Fed rate increase until December or even next year should the situation deteriorate further," wrote Brian Rehling, co-head of global fixed income strategy at Wells Fargo Investment Institute in a Tuesday note. "We still expect the Fed to begin raising rates this year."
Meanwhile, former Fed Gov. Larry Lindsey told CNBC that central bankers will point to the drama in Greece as a reason to push its looming rate hike further down the road.
Greece announced over the weekend that it will hold a referendum on July 5 to allow citizens to decide if the country should remain in the 19-country eurozone. A "Grexit" would mean a return to Greece's old drachma currency. Though sources told Reuters that Greek officials are open to nixing the referendum in order to make way for a debt deal.
Reports suggest German Chancellor Angela Merkel won't negotiate any last-minute debt deal with Greece before Sunday's referendum. That makes a default all the more likely.