KEY POINTS

  • Donald Trump implored the Fed to cut interest rates at Wednesday's meeting
  • China's coronavirus has infected at least 4,500 people
  • US stocks rebounded from Monday's massive sell-off

U.S. stocks closed higher on Tuesday, rebounding from Monday’s steep losses, ahead of Apple’s quarterly earnings release, while investors cast wary eyes at the virus outbreak in China.

The Dow Jones Industrial Average gained 186.30 points to 28,722.10 while the S&P 500 rose 32.60 points to 3,276.23 and the Nasdaq Composite Index advanced 130.37 points to 9,269.68.

Volume on the New York Stock Exchange totaled 2.79 billion shares with 2,051 issues advancing, 143 setting new highs, and 864 declining, with 55 setting new lows.

Active movers were led by Pfizer Inc. (PFE), Ford Motor Co. (F) and General Electric Co. (GE).

Chinese health authorities said that at least 106 people have died from the coronavirus and the number of confirmed cases exceeded 4,500. Many major cities in China have been placed under lockdown.

Hong Kong Chief Executive Carrie Lam said the city-state will close some border checkpoints and restrict flights and train services from mainland China.

President Donald Trump tweeted on Monday that the U.S. is “in very close communication with China concerning the virus.”

“The wall of worry is back under construction with concerns over the coronavirus and the pace of global growth and valuation,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. “Stocks are rallying following yesterday’s sell-off, however, the unknowns remain unknown. At a minimum, the volatility we’re experiencing now is likely to be more of the norm than the exception over the next few weeks.”

Nicholas Colas, co-founder of DataTrek Research, said that from an investment perspective, “the largest challenge around the Wuhan coronavirus is the lack of historical comparisons that might help sensibly frame the risks.”

“China is in a better position to address the current crisis relative to SARS, both because its population is now more affluent as well as the country’s improvements to its national health care system,” Colas added.

On Tuesday, Trump also tweeted his criticism of the Federal Reserve ahead of the central bank decision on interest rates on Wednesday.

“The Fed should get smart [and] lower the rate to make our interest competitive with other countries which pay much lower [rates] even though we are, by far, the high standard. We would then focus on paying off [and] refinancing debt! There is almost no inflation-this is the time!”

The Fed is widely expected to make no change on interest rates.

The Commerce Department said on Tuesday that orders for core capital goods excluding aircraft, dropped by 0.9% in December -- the largest such decline since April.

In December, overall orders for durable goods gained 2.4% after falling 3.1% in the prior month.

The S&P CoreLogic Case-Shiller National Home Price Index increased 3.5% on an annualized basis in November, up from a 3.2% gain in October.

Price rises were especially robust in Phoenix, Charlotte and Tampa.

“With the month’s 3.5% increase in the national composite index, home prices are currently 59% above the trough reached in February 2012, and 15% above their pre-financial crisis peak,” said Craig J. Lazzara, managing director and global head of Index Investment Strategy at S&P Dow Jones Indices. “November’s results were broad-based, with gains in every city in our 20-city composite.”

The Conference Board’s consumer confidence index jumped to 131.6 this month from 126.5 in December.

Apple (AAPL) will report its quarterly earnings after Tuesday’s close.

Markets in mainland China and Hong Kong were closed for the lunar new year holiday. Japan’s Nikkei-225 dropped 0.55%.

In Europe markets finished higher, as Britain’s FTSE-100 gained 0.93%, France’s CAC-40 rose 1.07% and Germany’s DAX also climbed 0.9%.

Crude oil futures gained 0.81% at $53.57 per barrel and Brent crude rose 0.15% at $58.90. Gold futures fell 0.58%.

The euro edged up 0.01% at $1.1021 while the pound sterling fell 0.3% at $1.3019.

The yield on the 10-year Treasury rose 2.24% to 1.641% while yield on the 30-year Treasury gained 1.95% to 2.095%.