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Stocks surge, put shaky few weeks further behind them

| Tuesday, Aug. 22, 2017, 5:45 p.m.
The American flag flies above the Wall Street entrance to the New York Stock Exchange.
The American flag flies above the Wall Street entrance to the New York Stock Exchange.

NEW YORK — Stocks around the world jumped Tuesday, and the Standard & Poor's 500 had one of its best days of the year, as markets put a shaky last couple of weeks further behind them.

Shares of technology companies and retailers helped lead the way in the United States. And with markets in a less-nervous mood, prices for Treasury bonds, gold and other go-to investments for turbulent times fell.

The Standard & Poor's 500 rose 24.14 points, or 1 percent, to 2,452.51 for its fourth-biggest gain of the year. It's taken just two days for the index to recoup half the loss it sustained in the two weeks since setting a record on Aug. 7. Those two weeks were a jolt for markets, as worries rose about political strife in Washington and abroad.

The Dow Jones industrial average rose 196.14 points, or 0.9 percent, to 21,899.89 on Tuesday, and the Nasdaq composite gained 84.35, or 1.4 percent, to 6,297.48.

It's the latest example of investors seeing drops in the market as opportunities to buy, not reasons to unload stocks.

"We've seen these blips of volatility this year, and we have tended to calm down very quickly afterward," said Jon Adams, senior investment strategist at BMO Global Asset Management.

He pointed in part to increased optimism that Washington will avoid a default on the federal debt. The Senate's majority leader said on Monday there is "zero chance" that Congress will vote against increasing the country's borrowing limit.

Many analysts are expecting markets to drift sideways in upcoming weeks, with few market-moving events on the calendar.

One highlight could be the symposium for central bankers from around the world in Jackson Hole, Wyo., at the end of this week. The Federal Reserve is raising interest rates and is preparing to pare the $4.5 trillion it holds on its balance sheet, and investors are wondering when the European Central Bank will follow suit.

The heads of both the Fed and the European Central Bank are expected to speak at the symposium, and if either suggests a more aggressive pace than investors are expecting, it would likely mean another tumble for markets. But investors say the Fed in particular has been meticulous in setting expectations so markets aren't taken by surprise.

"We wouldn't expect much market moving overall," Adams said.

If markets do end up calming down, it would mark a return to a smooth ride for investors. The S&P 500 is up 9.5 percent for the year, and the climb had been a remarkably placid one until two weeks ago. It had just two days this year where it fell by 1 percent or more, before doubling its tally during the last two weeks.

Technology companies led the way, and those in the S&P 500 rose 1.5 percent for the biggest gain among the 11 sectors that make up the index.

Macy's jumped to one of the largest gains in the index after it said an eBay executive, Hal Lawton, would become its president. Traditional retailers have been struggling to compete with online rivals, and Macy's also said it is restructuring its organization to drive more sales and cut costs. Its stock rose 89 cents, or 4.6 percent, to $20.42.

Shoe retailer DSW surged $2.74, or 17.5 percent, to $18.43 after it reported stronger earnings and revenue for the latest quarter than analysts had forecast.

Markets abroad were likewise strong. In Europe, Germany's DAX jumped 1.4 percent, France's CAC 40 rose 0.9 percent and the FTSE 100 gained 0.9 percent in London.

In Asia, Hong Kong's Hang Seng climbed 0.9 percent, South Korea's Kospi added 0.4 percent and the Nikkei 225 in Japan was virtually flat.

The ebullient tone led investors to sell Treasury bonds, which are considered among the safest investments. That in turn pushed up yields. The 10-year Treasury note's yield rose to 2.21 percent from 2.18 percent late Monday.

The dollar rose to 109.52 Japanese yen from 108.85 yen late Friday. The euro fell to $1.1752 from $1.1813, and the British pound fell to $1.2828 from $1.2901.

Benchmark U.S. crude rose 27 cents to settle at $47.64 per barrel. Brent crude, the international standard, gained 21 cents to settle at $51.87 a barrel.

Natural gas fell 2 cents to $2.94 per 1,000 cubic feet, heating oil was virtually flat at $1.59 per gallon and wholesale gasoline rose a penny to $1.59 per gallon.

Gold fell $5.70 to $1,291.00 per ounce, silver fell 3 cents to $16.98 per ounce and copper rose 1 cents to $2.99 per pound.

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