U.S. stocks jumped on Tuesday, building on a strong rally in the previous session as concerns about a speculative retail trading frenzy continued to ease.
The Dow Jones Industrials hurtled 577.75 points, or 1.9%, to 30,785.45
The S&P 500 gained 64.11 points, or 1.7%, to 3,838.13.
The NASDAQ rose 223.89 points, or 1.7%, to 13,628.71, bringing its week-to-date gains to nearly 4%.
The back-to-back advance on Wall Street coincided with a sharp reversal in GameStop, the video game stock that captivated Wall Street with its massive short squeeze coordinated by a band of retail investors on social media. GameStop, fresh off a 400% rise last week, slid 30% on Monday and fell another 50% Tuesday. The stock has now lost more than half of its value in two days.
Other highly speculative investments popular with the Reddit crowd also started to decline. AMC Entertainment dropped more than 35%. Futures contracts for silver, which enjoyed their biggest one-day jump in 11 years Monday, slid more than 5% Tuesday.
Investors took it as a sign that the speculative mania from retail traders is unwinding, which is healthy for the overall market and investor confidence. The stock market suffered its worst week since October last week as many grew worried the wild trading activity in those heavily shorted names could be contagious and spill over to other areas of the markets.
Investors also awaited big earnings reports Tuesday, with tech giants Amazon and Alphabet set to release quarterly numbers after the market close.
Investors will also be following stimulus negotiations in Washington, where congressional Republicans made a counteroffer to President Joe Biden’s $1.9-trillion stimulus plan on Sunday.
Biden met with those lawmakers on Monday as congressional Democrats moved toward passing a reconciliation bill without bipartisan support. White House press secretary Jen Psaki described the meeting as “substantive and productive.”
Prices for 10-Year Treasurys stumbled, raising yields to 1.1% from Monday’s 1.07%. Treasury prices and yields move in opposite directions.
Oil prices advanced $1.22 to $54.77 U.S. a barrel.
Gold prices subtracted $26.20 to $1,837.70 U.S. an ounce.