S&P 500, Dow track best quarter since 1998 on stimulus-led rebound hopes

NEW YORK (Reuters) – The S&P 500 rallied on Tuesday to finish higher and secure its biggest quarterly percentage gain in more than two decades as improving economic data bolstered investor beliefs that a stimulus-backed rebound for the U.S. economy was on the horizon.

Coming off a drop of 20% in the first quarter, the biggest quarterly decline since the financial crisis in the fourth quarter of 2008, the S&P rallied more than 19.95% to notch its biggest quarterly gain since 1998, at the height of the tech boom.

The gains have been fueled by unprecedented levels of fiscal and monetary stimulus and the easing of restrictions.

But the S&P 500 is still down about 4% on the year, and gains in June stood at just 2% due to the flare-up in virus cases that has threatened to delay reopenings and derail a tentative economic recovery. Federal Reserve Chairman Jerome Powell reiterated in comments on Tuesday that the path of the economy is “highly uncertain.”

“What everybody sees is if we can get something that puts an end to the spread or the spread becomes less, there is literally so much money out there that the Fed has put out there that when we turn, it is going to be a rocket ship the other way,” said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.

Still, comments from Anthony Fauci, the U.S. government’s top infectious diseases expert, who said there was no guarantee the United States will have an effective COVID-19 vaccine and warned the virus spread “could get very bad,” were a reminder that a full economic recovery could be a long road.

Gains were capped on the Dow, pressured by a 5.75% drop in Boeing Co (BA.N), as the airplane maker gave back some of Monday’s

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