By Stan Choe and Damian J. Troise
Updated 5:02 pm ET
Stocks rallied worldwide on Monday as investors bet that the economy can continue its dramatic turnaround despite all the challenges ahead.
The S&P 500 rose 1.6 percent, following up on similar gains in Europe and Asia, and clawed back to within 6.1 percent of its record set in February. The headliner was China's stock market, which leaped 5.7 percent for its biggest gain since 2015, when it was in the midst of a bubble bursting. Treasury yields also ticked higher in a signal of growing optimism after reports showed improvements in the U.S. and European economies.
Stocks of the biggest companies once again led the way, and strength for Apple, Amazon and other tech-oriented titans helped lift the Nasdaq composite 226.02 points, or 2.2 percent, to close at a record high of 10,433.65.
The Dow Jones Industrial Average rose 459.67 points, or 1.8 percent, to 26,287.03. The S&P 500 rose 49.71 points to 3,179.72 for its third gain of at least 1.5 percent in the last five days.
They're the latest buoyant moves for markets, where investors are focusing more on recent improvements in the economy and all the stimulus that central banks and governments are supplying than on how much pain still remains. Investors are also continuing to sidestep the mounting number of known coronavirus infections, at least for now.
"The economic damage isn't going to be as dire and severe as was initially predicted," said Peter Essele, head of portfolio management for Commonwealth Financial Network. "That helps explain the rebound."
The worry is that if the pandemic keeps worsening, with hotspots stretching across the U.S. South and West, it could scare shoppers and businesses away from spending. The worst-case scenario for markets is that governments resume lockdowns implemented during the spring and choke off the budding economic recovery. Either way, many economists expect the global economy to take years before returning to its output from before the pandemic.
The huge spending efforts to resuscitate the economy could also lead to a reckoning in the future. "We have now mortgaged our entire future to try and withstand this downturn," Essele said.
At some point, the buildup in debt for the U.S. government could lead to higher taxes and interest rates. But markets generally see that as a potential problem for another day.
For now, the trend is still upward. Monday's rally follows last week's 4 percent gain for the S&P 500, which itself helped cap the best quarter for the U.S. stock market since 1998. It's a whiplash turnaround from the market's earlier sell-off, which sent the S&P 500 down nearly 34 percent from its record.
A report released Monday morning showed that U.S. services industries snapped back to growth in June. The results were much stronger than economists expected. They also followed reports from last week that showed U.S. employers added more workers than they cut for the second straight month and that U.S. manufacturing returned to growth in June.
Miner Freeport-McMoRan jumped 10.9 percent for the largest gain in the S&P 500 after it said sales of copper and gold were stronger in the latest quarter than it had earlier forecast.
Big tech-oriented companies also continued their dominance amid expectations their growth can roll on almost regardless of the economy's performance. Apple gained 2.7 percent, Microsoft rose 2.2 percent and Amazon climbed 5.8 percent to top $3,000 per share.
The immense size of these companies also gives their stocks' movements much larger sway over market indexes. The Russell 2000 index of smaller stocks was up a more modest 0.8 percent.
Some dealmaking also helped to lift markets.
Berkshire Hathaway, led by famed bargain hunter Warren Buffett, has agreed to buy Dominion Energy's operations for moving and storing natural gas. Berkshire Hathaway, which has a reputation for waiting until prices reach attractive lows before pouncing, will pay roughly $4 billion in cash under the deal, as well as assume $5.7 billion in debt.
Berkshire Hathaway's Class B shares rose 2.2 percent. Dominion Energy fell 11 percent. While announcing the sale, it also said that it and Duke Energy were canceling a controversial $8 billion natural-gas pipeline project.
Uber rose 6 percent after it said it will buy food-delivery business Postmates for $2.65 billion in stock. The deal would fold Postmates in with Uber's Uber Eats unit.
The yield on the 10-year Treasury rose to 0.68 percent from 0.67 percent late Thursday. Markets were closed Friday for Independence Day. The yield tends to move with investors' expectations for the economy and inflation.
In Europe, Germany's DAX returned 1.6 percent, and France's CAC 40 rose 1.5 percent. The FTSE 100 in London added 2.1 percent. Retail sales rebounded in May in the 19 countries that use the euro, while car sales in Britain picked up in June as lockdown measures were eased.
In Asia, Japan's Nikkei 225 rose 1.8 percent, South Korea's Kospi gained 1.7 percent and the Hang Seng in Hong Kong jumped 3.8 percent.
Benchmark U.S. crude oil for August delivery fell 2 cents to settle at $40.63 a barrel. Brent crude oil for September delivery rose 30 cents to $43.10 a barrel.
AP Business Writer Joe McDonald contributed.