NEW YORK (AP) 鈥� Wall Street rallied after a round of reports suggested the economy is in better shape than feared. The S&P 500 rose 1.1% Tuesday, resuming its upward climb following a weeklong pullback after hitting its highest level in more than a year. The Dow tacked on 211 points, or 0.6%, while the Nasdaq rose 1.6%. Airlines helped to lead the way after Delta said demand for travel still looks strong, particularly among high-income passengers. Delta rose 6.8%. Readings released Tuesday morning on consumer confidence, sales of new homes and other areas of the economy all topped economists鈥� forecasts.
THIS IS A BREAKING NEWS UPDATE. AP鈥檚 earlier story follows below.
NEW YORK (AP) 鈥� Wall Street is rallying Tuesday after a round of reports suggested the economy is in better shape than feared.
The S&P 500 was 1.2% higher in afternoon trading, resuming its upward climb following a weeklong pullback after it hit its highest level in more than a year. The Dow Jones Industrial Average was up 239 points, or 0.7%, at 33,954 with less than an hour remaining in trading, while the Nasdaq composite was 1.7% higher.
Airlines were helping to lead the way after Delta Air Lines said it still sees pent-up demand in the pipeline as passengers make up for lost opportunities to travel during the pandemic. It highlighted high-income customers in particular, who account for three-quarters of spending on air travel and still look to be in good financial shape despite high inflation.
Delta's stock rose 6.5% after it said earnings this year should come in at the top end of the range it had earlier forecast. American Airlines climbed 5.3%, and United Airlines rose 5.3%.
Big tech stocks were also strong, continuing a strong run this year spurred by excitement around artificial-intelligence technology. Nvidia, which has been at the center of the AI frenzy, rose 2.5% to vault its gain for the year so far to roughly 185%.
High inflation is hurting other companies more directly, though. Walgreens Boots Alliance dropped 9.4% after it reported weaker profit for the latest quarter than analysts expected. The retail pharmacy company also cut its forecast for earnings this fiscal year, saying customers have become more cautious in their spending and are looking for more value amid high inflation.
Lordstown Motors sank 24.5% after bankruptcy protection. It had warned in early May that it was in danger of failing due to a dispute with electronics company Foxconn, which was wavering on a $170 million investment in the startup company.
The U.S. stock market has been on a tear this year despite much higher interest rates meant to get inflation under control, in part because the economy has so far managed to avoid a recession. But many investors are just delaying their predictions for the start of a recession rather than cancelling them.
Reports on the economy Tuesday were largely stronger than expected. A reading on to its highest level since the start of 2022, and orders for long-lasting manufactured goods unexpectedly grew, beating economists' forecasts for a pullback.
Sales of new homes in May also topped economists' expectations, which sent stocks of homebuilders climbing. Lennar rose 3.9% and Toll Brothers rose 3%.
A measure of manufacturing activity in the Richmond, Virginia, region stretching from Maryland to South Carolina contracted, but not by as much as economists feared. Manufacturing has been one of industries hardest hit by much higher interest rates.
All the economic data will feed into decisions by the Federal Reserve and other central banks about whether to keep cranking interest rates higher. High rates can undercut inflation, but they do so by slowing the entire economy and raising the risk of a recession.
Christine Lagarde, the head of the European Central Bank, warned Tuesday that and pledged to raise rates high enough 鈥渢o break this persistence.鈥� She once again made it seem nearly certain the central bank will raise rates again in July.
That鈥檚 also the expectation for the Federal Reserve. But the hope on Wall Street is that a hike next month could be the final one for the Fed, even if it has suggested recently that it could raise rates twice more this year.
Traders have largely given up on hopes of multiple cuts to interest rates in 2023, something that many were predicting earlier this year.
鈥淲e believe central banks have more work to do,鈥� said Andrew Patterson, senior international economist at Vanguard. 鈥淲e鈥檝e always said inflation wouldn鈥檛 come down magically, even as post-pandemic supply chain issues were resolved."
In Asian markets, stocks in Shanghai rose 1.2%. China鈥檚 No. 2 leader, and can hit this year鈥檚 official 5% target. Li, speaking at a conference, gave no growth rate for the latest quarter but said it is faster than the previous quarter鈥檚 4.5%.
Stocks also jumped 1.9% in Hong Kong, though they were more muted elsewhere in Asia and across Europe.
In the bond market, the yield on the 10-year U.S. Treasury rose to 3.76% from 3.72% late Monday. It helps set rates for mortgages and other important loans.
The two-year Treasury yield, which moves more on expectations for the Fed, rose to 4.76% from 4.74%.
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AP Business Writers Matt Ott and Joe McDonald contributed.
Stan Choe, The Associated Press
