Stocks rallied Tuesday as banks, retailers, and smaller companies jumped. That helped the market recover most of its losses from the previous two days.
The Turkish lira steadied as US and Turkish officials said the countries are in talks to ease diplomatic tensions, which have resulted in high tariffs on Turkish steel and aluminum. Stocks in emerging markets like Argentina, Russia, and Brazil jumped.
In the United States, the biggest gains went to small and mid-size companies, which do more business domestically, compared to the large multinational companies on indexes like the S&P 500 and Dow Jones industrial average. Retailers rose, thanks in part to strong quarterly reports.
The reduced tension with Turkey also stopped a rally in bond prices and sent yields and interest rates higher. That helped banks. Industrial and basic materials companies also rose Tuesday, but compared to other parts of the market they didn’t recover as much of their losses.
Invesco chief global market strategist Kristina Hooper said investors are shifting money into more US-focused companies in response to the Trump administration’s aggressive handling of its dispute with Turkey, a longtime member of NATO.
‘‘This is a reminder that the US is a very different country than it was just a few years ago,’’ she said.
The S&P 500 climbed 0.6 percent, to 2,839.96. The Dow gained 0.4 percent, to 25,299.92. The Nasdaq added 0.7 percent, to 7,870.89. The Russell 2000 index advanced 1 percent, to 1,692.58.
The S&P 500 fell a combined 1.1 percent Friday and Monday as investors worried that Turkey’s financial woes would affect other countries.
Many retailers will report quarterly results this week, a potential hint about how much money consumers are spending. Tapestry, the parent company of Coach and Kate Spade, jumped 12 percent after its fourth-quarter results surpassed analysts’ estimates.
Advance Auto Parts jumped 7.8 percent after it did better than expected in the second quarter. Competitors AutoZone and O’Reilly Automotive climbed, as well.
Smaller companies made outsize gains. Footwear maker Wolverine World Wide gained 2.4 percent, and watchmaker Fossil rose 4.8 percent.
Among midsize companies, Boston Beer picked up 3.9 percent and RV maker Thor Industries rose 2.6 percent.
Global markets fell Friday and Monday on concern that Turkey’s currency turmoil could spread and affect the world economy. The Argentine peso and India’s rupee hit record lows against the dollar. Those jitters eased later Tuesday.
Economists say Turkey’s central bank still needs to raise interest rates significantly to strengthen its currency. President Recep Tayyip Erdogan has ruled out that step.
Bond prices moved lower. The yield on the 10-year Treasury note rose to 2.90 percent from 2.88 percent.
Cigna and Express Scripts both rose after billionaire investor Carl Icahn said he’s ending his campaign to block the deal. He had urged Cigna shareholders to vote against the $52 billion acquisition of Express Scripts and said the price was far too high.
Health insurer Cigna added 1.9 percent and Express Scripts, a pharmacy benefits manager, picked up 2.4 percent.
Consumer credit company Synchrony Financial rose 2.8 percent after it said it extended a contract to manage credit card programs for home improvement retailer Lowe’s. Lowe’s gained 1.3 percent.
Benchmark US crude slipped 0.2 percent to $67.04 per barrel in New York. Brent crude, used to price international oils, dipped 0.2 percent to $72.46 in London.
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