Stocks recovered from a two-day selloff on Tuesday as Brexit worries were priced into the market and hopes of further stimulus rose.
The S&P 500 was up 1%, the Dow Jones Industrial Average rose 0.91%, and the Nasdaq climbed 1.5%.
The S&P 500 fell more than 5% over the past two days after the United Kingdom voted to leave the European Union. The move has far-reaching political and economic consequences as new trade deals and regulations begin to get drawn up over the next two years. Both Standard & Poor's and Fitch lowered their ratings on U.K. debt on Monday.
The two-day selloff in global markets wiped out $3 trillion in market capitalization on the Brexit shock. The pound plummeted to its lowest level in 30 years on Monday, driving the greenback higher and pushing crude oil prices to their worst settlement in a week.
Talk of further accommodation from global central banks appeared to boost investor appetite on Tuesday. Hopes have begun to rise that the Bank of England and the Bank of Japan could offer further stimulus in the wake of the uncertainty in Europe. Since Friday, the chances of a rate hike from the Federal Reserve this year have become unlikely, according to CME Group fed funds futures.
The British government has abandoned plans to sell its stakes in Royal Bank of Scotland (RBS) and Lloyds Banking Group (LYG) this year in the wake of the Brexit vote, according to sources, Reuters reported. The government had hoped to reduce its exposure to the banks it took over during the financial crisis, raising roughly 9 billion euros through stock sales.
Crude oil recovered on Tuesday after also participating in the two-day selloff. The commodity had been under pressure as the greenback soared, deterring foreign purchases of U.S.-produced oil. West Texas Intermediate crude oil was up 2% to $47.24 a barrel on Tuesday morning.
The energy sector was leading market gains. Major oilers Exxon Mobil (XOM) , Royal Dutch Shell (RDS.A) , Chevron (CVX) , PetroChina (PTR) , Total (TOT) and BP (BP) were higher, while the Energy Select Sector SPDR ETF (XLE) added 1.4%.
First-quarter U.S. gross domestic product was raised to 1.1% growth in the third and final reading on Tuesday morning. First-quarter GDP has previously been estimated at 0.8%. Consumer spending was reduced, while exports were revised to show a slight gain over a previously estimated decline.
The U.S. economy suffered an economic slowdown at the beginning of the year as cautious consumers opted to save rather than spend, a strong U.S. dollar and weaker overseas demand hampered U.S. manufacturing, and energy prices continued to weigh on the sector.
Home prices continued to climb in April, though at a slightly slower pace than in March, according to the S&P Case-Shiller Home Price Index. Prices rose 5% over the past 12 months ending April, less than 5.1% growth in March. Tight inventory and strong demand have driven home prices in the past year.
Consumer confidence in the U.S. improved in June at a far-faster pace than analysts expected. The Conference Board's index climbed to a reading of 98 this month, up from a revised 92.6 in May and well above expectations for a reading of 93.3.
The cost to settle Volkswagen's (VLKAY) numerous lawsuits in the U.S. over an emissions-cheating investigation has increased to more than $15 billion, one-third higher than previously expected. The German automaker is expected to come to another settlement with a San Francisco court on Tuesday which could involve buybacks for 475,000 affected vehicles and $5 billion in fines.
SolarCity's (SCTY) board has appointed a two-person committee to ensure Tesla's (TSLA) proposal to acquire all of the remaining SolarCity common stock is fairly evaluated, Re/code reported. Tesla announced plans last week to buy all of SolarCity's common stock, a move some described as a bailout given Elon Musk's position as chairman to both companies.
Lending Club (LC) climbed 5% after announcing plans to cut 179 positions. The peer-to-peer lender has been under pressure since May when CEO Renaud Laplanche stepped down over an investigation into its lending practices. The job cuts are tied to lower loan volumes over the current quarter. The company also said acting CEO Scott Sanborn would become its permanent CEO and president.
ReachLocal (RLOC) rocketed higher by 173% after receiving a buyout offer from Gannett (GCI) . Gannett intends to purchase the digital marketing company for $4.60 a share. The deal has a total worth of roughly $156 million and is expected to close in the third quarter.
Dow Chemical (DOW) announced plans to cut 4% of its workforce, roughly 2,500 jobs, as part of its DuPont (DD) merger. The layoffs will be primarily in its silicone manufacturing facilities in North Carolina and Japan. Factory closing and job cuts are expected to be carried out over the next two years.
Carnival (CCL) rose 2% after topping second-quarter earnings estimates and announcing a $1 billion stock buyback program. The cruise line company earned an adjusted 49 cents a share in its recent quarter, a dime above expectations.