Stocks jumped more than 1 percent on Tuesday as investors were drawn by oversold conditions on a technical basis and retail sales data was better than expected.
U.S. retail sales declined for the first time in 11 months, but less than forecast, giving some respite from recent weak economic data.
The session's gains, following six weeks of declines, were broad, with the S&P retail index <.RLX> gaining 2 percent. Energy shares also outperformed the broader market, with the S&P energy sector <.GSPE> up 2 percent.
It's a little reflex bounce ... The S&P is 70 percent oversold, and when you get in that range, historically you start to see a bounce, said Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston.
I would expect this bounce phase to carry through the week, but then the market could resume its recent downward trend.
The Dow Jones industrial average <.DJI> gained 121.06 points, or 1.01 percent, at 12,074.03. The Standard & Poor's 500 Index <.SPX> put on 15.21 points, or 1.20 percent, at 1,287.04. The Nasdaq Composite Index <.IXIC> advanced 37.49 points, or 1.42 percent, at 2,677.18.
Zaro along with other investors watched for a retreat in the S&P 500 to its March low near the 1,250 level. The index closed flat on Monday after hitting a near three-month low last Friday.
The S&P 500 is down more than 7 percent from its high in early May as weak data sparked worries about the sustainability of an economic recovery.
On the Nasdaq, Zaro looked for a break below the March low of 2,620, though he said the index could test the 2,460-2,480 range in the months ahead.
In a sign that individual investors may be losing confidence in the stock market, customer trading slowed substantially last month, with more clients money moving into cash and out of stocks and other areas, according to brokerage Charles Schwab Corp
In China, inflation was still a concern after consumer prices rose at their fastest pace in almost three years, but industrial output grew from a year ago, in line with forecasts. China's central bank increased the reserve requirement ratio for commercial lenders by 50 basis points.
(Reporting by Caroline Valetkevitch; additional reporting by Rodrigo Campos; editing by Jeffrey Benkoe)