U.S. Stocks Waver, on Track for Big Quarterly Gains

U.S. stocks edged higher Tuesday, remaining on track to close out their best quarter in more than 20 years.

The S&P 500 rose 0.6% in recent trading. The Dow Jones Industrial Average recovered from an earlier decline, adding 86 points, or 0.7%, to 25675, and the Nasdaq Composite advanced 0.9%.

Tuesday's moves put market's three-month rally on pace to end on a high note. The S&P 500 and Dow industrials have risen 19% and 17%, respectively, since the end of March, on pace to close out their best quarters since the last three months of 1998. The technology-laden Nasdaq has soared 29%, on track to notch its strongest period since the fourth quarter of 2001.

The gains defied most analysts' expectations and followed the collapse of the longest bull market on record, as concerns around the coronavirus crisis swept over markets and eventually the rest of the U.S. But unprecedented monetary stimulus and aggressive actions by the Federal Reserve to support credit markets helped propel the rebound.

Still, the rally showed signs of losing steam in June, stymied by rising numbers of infections and the potential for renewed lockdowns. Both the Dow and the S&P 500 were on pace to close out June roughly where the indexes started after booking two solid months of gains.

On Tuesday, fresh data pointing to a strengthening recovery in China's manufacturing sector was clouded by investors trying to determine whether governments' new restrictions could be enough to prevent health-care systems from being overwhelmed, while posing less of an economic cost than prior shutdowns.

"China's economic data was pretty strong, driving up Asian stocks and offering some comfort to other markets as well," said Seema Shah, chief strategist, at Principal Global Investors. "But the resurgence of the virus in the U.S. and new restrictions will be the main focus for investors."

U.S. stocks are likely to "see a slow consolidation" in coming weeks, rather than a strong rally or a sharp correction, said Ms. Shah.

A gauge of U.S. consumer confidence, measured by the Conference Board, is likely to offer fresh insights into American households' willingness to spend money and drive the economic recovery. That reading is due out at 10 a.m. ET.

"The key data at the moment are anything that offers insight on consumer confidence," said Ms. Shah. "If people start to see localized lockdowns and that weighs on confidence, it will weigh on the recovery."

Cases of new infections alone won't be enough to gauge the economic impact of the virus going forward, analysts and economists said.

"Authorities have much more experience now than in March and April," said Holger Schmieding, chief economist at Berenberg Bank. "Targeted measures such as closing crowded bars and face masks, plus a change in behavior, will avoid a New York or Northern Italy-style overstretch of the health care systems," which is the key risk facing financial markets, he said.

Earlier this week, authorities in Florida, Texas, California and Arizona -- the states that have accounted for much of the recent rise in U.S. cases -- imposed new restrictions and retreated on reopening plans. In the U.K., the city of Leicester was placed under severe restrictions Monday after data showed it had elevated infection levels relative to the rest of the country.

Shares of U.S. chip maker Xilinx rose 7.7% after it lifted its guidance, noting higher-than-expected revenue during the June quarter.

Ride-hailing company Uber's shares rose 3.3% after it emerged that it was in talks to buy Postmates for about $2.6 billion, The Wall Street Journal earlier reported.

Boeing shares fell 5% after Norwegian Air Shuttle said it is canceling its orders for 92 of Boeing's troubled 737 MAX jets. The company's shares are down 43% this year so far.

Federal Reserve Chairman Jerome Powell on Tuesday will tell Congress the reopening of the U.S. economy -- and the accompanying upturn in spending and hiring this spring -- has happened sooner than central bank officials expected. The push to lift restrictions on commercial activity carries other risks, especially in terms of keeping the virus in check, he said in testimony prepared to deliver before lawmakers at 12:30 p.m. ET.

Elsewhere, the pan-continental Stoxx Europe 600 mostly flat as it neared the end of its session.

Over in Asia, fresh signs emerged Tuesday that China's economic recovery is picking up steam with the lifting of the coronavirus-related lockdowns.

The Shanghai Composite Index, which tracks Chinese stocks, rose 0.8%. Elsewhere in Asia, Japan's Nikkei 225 benchmark was among the biggest gainers, closing up 1.3%.

--Michael Wursthorn contributed to this article.

Write to Anna Isaac at anna.isaac@wsj.com

  (END) Dow Jones Newswires
  06-30-20 1115ET
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