Dip buyers emerged a day after a tumultuous trading session, driving stocks to their biggest rally since March.

The S&P 500 almost erased its Monday’s slide as traders shrugged off concern that the coronavirus resurgence would curtail the economic recovery. Cyclical companies, which got pummeled during the selloff, were the ones leading gains on Tuesday. A gauge of small caps climbed about 3 per cent. For several investors, the recent rout was just another buying opportunity in an environment of solid corporate earnings, government stimulus and ultra-easy monetary policy.

“Pretty amazing rebound, really,” said JJ Kinahan, chief market strategist at TD Ameritrade. “That buy-the-dip mentality has played well. It’s like a football coach that runs the same play that keeps working. There’s no reason to change that play. It’s certainly working again.”

In fact, it was during Monday’s selloff that BNY Mellon Wealth Management’s Alicia Levine said she got out her “shopping list.”

Levine said in a Bloomberg TV and Radio interview that she remains “very bullish” on stocks. For Bill Callahan, an investment strategist at Schroders, “equities just make sense right now,” and dip buyers will be rewarded as the market continues to grind higher.

On the economic front, data showed U.S. housing starts increased in June by more than forecast, suggesting residential construction is stabilizing despite lingering supply-chain constraints and labor shortages.

Elsewhere, Bitcoin dropped below US$30,000 for the first time in about a month. Some traders view that level as a key support that could open the way to more losses.

Some key events to watch this week:

• European Central Bank rate decision Thursday
• Bank Indonesia rate decision Thursday
• U.S. existing home sales Thursday
• The Tokyo Summer Olympics begin Friday

Here are some of the main market moves:

Stocks

• The S&P 500 rose 1.5 per cent as of 4 p.m. New York time
• The Nasdaq 100 rose 1.2 per cent
• The Dow Jones Industrial Average rose 1.6 per cent
• The MSCI World index rose 0.9 per cent
• The Russell 2000 Index rose 3 per cent

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro fell 0.2 per cent to US$1.1781
• The British pound fell 0.3 per cent to US$1.3630
• The Japanese yen fell 0.3 per cent to 109.83 per dollar

Bonds

• The yield on 10-year Treasuries advanced two basis points to 1.21 per cent
• Germany’s 10-year yield declined two basis points to -0.41 per cent
• Britain’s 10-year yield was little changed at 0.56 per cent

Commodities

• West Texas Intermediate crude rose 1.5 per cent to US$67.42 a barrel
• Gold futures were little changed