Stocks rose on Wednesday as strong quarterly results from retailers such as Target and Lowe's lifted investor sentiment.
The Dow Jones Industrial Average closed 240.29 points higher, or 0.9%, at 26,202.73. The S&P 500 gained 0.8% to close at 2,924.43. The Nasdaq Composite jumped 0.9% to 8,020.21. The major indexes held on to their gains even after the bond market flashed a recession signal in the last hour of trading.
The better-than-expected results come at a time when traders are worried about a possible U.S. economic slowdown. Those fears have led investors away from riskier assets like equities in favor of traditionally safer assets like gold and Treasurys.
"A very mild recession could begin in 2020 but the stock market data don't support that just yet. That could change in the next rally, but it doesn't support it right now," said Paul Schatz, president at Heritage Capital.
Target shares surged more than 20% to a record after the retailer posted second-quarter results that topped analyst expectations. The company's same-store sales, a key metric for retailers, expanded by 3.4%. Analysts expected growth of 2.9%.
Lowe's jumped 10.4% on its second-quarter earnings report. CEO Marvin Ellison said the company capitalized on strong "holiday event execution and growth in Paint and our Pro business to deliver strong second quarter results."
"We're in the camp that there is strength in the broad-based consumer. It's underpinned by low inflation, decent wages and jobs growth," said Tom Martin, senior portfolio manager at Globalt.