NEW YORK – U.S. stocks rose for a second day as a rally in commodity shares ignited broader gains, while data showed consumer spending bolstered the economy amid slowing growth overseas.
The two most beaten-down industries this year — energy and raw-materials — led most of Tuesday’s advance, keeping alive prospects for an anticipated year-end rally. Caterpillar surged to its best gain in two months, while Wal-Mart Stores gained 1.7 percent as data showed consumers continued to spend. Chipotle Mexican Grill fell on an investigation into its links to a new spate of illnesses in three additional states.
The Standard & Poor’s 500 Index climbed 0.9 percent to 2,038.97 at 4 p.m. in New York, as the gauge added to its rebound from a two-month low. The Dow Jones industrial average rose 165.65 points, or 1 percent, to 17,417.27, while the Nasdaq composite index advanced 0.7 percent. About 6.4 billion shares traded hands on U.S. exchanges, 12 percent below the three-month average.
“Most of the major data is behind us for this year, you’re going to see volumes continue to decline,” said Michael Arone, the Boston-based chief investment strategist at State Street Global Advisors’ U.S. Intermediary Business. The firm oversees $2.4 trillion. GDP data “continues to tell us the same thing, that is the consumer is in reasonable shape and exports are continuing to struggle.”
A report Tuesday showed the economy expanded at a revised 2 percent annualized rate in the third quarter, buoyed by consumer spending. Meanwhile, businesses struggled with weaker overseas growth and a strong dollar, which have been a drag on net exports. Sustained growth in the U.S. combined with weakening in other parts of the globe, including in China, could widen the gap between exports and imports in the quarters ahead.
Investors have wavered between optimism on the U.S. economy and concern that slower growth overseas will spread. Federal Reserve policy makers last week signaled faith that the economy is performing well, while emphasizing they’re in no hurry to further boost interest rates. Investors were initially soothed by that message, though oil’s collapse below levels last seen during the 2008 global financial crisis weighed on sentiment.
The S&P 500 historically rises in December, with the final two weeks delivering an average gain of 1.7 percent. The so- called Santa rally is under pressure this year, with the benchmark down 2 percent in December and in the midst of its worst final month since 2002. After rebounding as much as 13 percent from its summer low through early November, the S&P 500 has retreated 3.4 percent, putting it on track for its biggest annual drop since the 2008 financial crisis.
In addition to the GDP numbers, data this week on new-home sales, durable-goods orders and personal spending will offer further clues on the health of the economy, after the Fed’s first rate increase in almost a decade. Officials at the central bank said any further rate hikes will be gradual and depend on the path of the recovery.
A report Tuesday showed sales of previously owned homes fell in November to the lowest level since April of last year as a change in industry rules lengthened the amount of time it took buyers to close on a deal.
The Chicago Board Options Exchange Volatility Index fell 11 percent Tuesday to 16.60, a two-week low. The measure of market turbulence further pared its gain this month to about 3 percent, after surging as much as 51 percent.
All of the S&P 500’s 10 main industries advanced, with energy, consumer staples, industrial and raw-material companies rising more than 1.2 percent. Energy remains on pace for its worst monthly decline in more than three years. Anadarko Petroleum and Diamond Offshore Drilling added more than 4.3 percent. West Texas Intermediate crude futures rose 0.9 percent to $36.14 a barrel.
Raw-material shares gained as fertilizer maker Mosaic and steel company Nucor rose at least 3.5 percent. The group rallied even as most commodities retreated, with nickel leading a drop in industrial metals as stockpiles expanded to the highest in more than two months amid signs of slowing demand.
Caterpillar’s strongest gain since Oct. 5 led the benchmark’s industrial group. The heavy-machinery maker is one of the Dow’s worst performers this year, down 25 percent as the slump in commodities has weighed on mining-equipment manufacturers. United Rentals , among the S&P 500 industrials’ weakest in 2015, climbed 4.3 percent Tuesday to trim its drop this year to 29 percent.
The story was similar in consumer staples, where two companies battered this year were the strongest gainers Tuesday. Whole Foods Market, which has struggled amid intensified competition, jumped 5.5 percent. The grocery store chain is down 31 percent year to date, headed toward its worst since 2008. Archer-Daniels-Midland added 3.1 percent to pare its 2015 drop to 30 percent.
Chipotle fell 5.3 percent, down for the seventh time in eight sessions as it reels from recent outbreaks of E. coli and norovirus at its restaurants. The shares are down almost 15 percent this month, on track for the worst in three years and have tumbled 35 percent since reaching an all-time high on Aug. 5.
Among other companies moving on corporate news, NetApp fell 5 percent after agreeing to buy SolidFire for $870 million in cash to boost its presence in the growing market for systems that can retrieve and store vast amounts of data at rapid speeds.
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With assistance from Roxana Zega.