By Anna Hirtenstein
U.S. stocks rose Tuesday as tech shares continued to climb in the wake of a flurry of deals activity in the sector.
The S&P 500 advanced 0.9%, and the Dow Jones Industrial Average added 0.6%, about 170 points. The tech-heavy Nasdaq Composite advanced 1.3%.
A wave of multibillion-dollar deals emerging earlier this week from well-known tech companies could boost stock benchmarks for a second day, underscoring the outsize role of a handful of giant firms in U.S. equity markets.
"There's been exuberance in the tech sector and valuations are high, but M&A means some people think there's still some assets that aren't overvalued, they may actually be undervalued," said Ludovic Subran, chief economist at Allianz. "M&A can be perceived as a sign of undervaluation" and some people will be buying.
Tech stocks continued to climb, extending Monday's rally. Apple rose 1.9% and Tesla added 4.5%. Nvidia shares advanced 1.8% after it said earlier this week it would acquire chip designer Arm Holdings from SoftBank.
Shares of NextEra Energy rose 5% after the utility raised its outlook for next year and announced a stock split.
Data Tuesday showed U.S. industrial production rose in August but at a lower rate than earlier in the summer, indicating the recovery in manufacturing is slowing.
Earlier Tuesday, key economic statistics showed that China's economic recovery accelerated in August. Retail sales in the Asian nation returned to pre-coronavirus levels with their first month of growth this year. Other major indicators, including factory production, investment and property activity, all gathered pace, signaling a strong rebound for the world's second-largest economy.
"It paints a fairly robust picture of the Chinese economy," said Sebastien Galy, a macro strategist at Nordea Asset Management. "It's a solid positive surprise, but the data tells you more about the message the Chinese government wants to give you."
The Shanghai Composite Index closed up 0.5%, and Hong Kong's Hang Seng Index rose 0.4%.
In Europe, the pan-continental Stoxx Europe 600 rose 0.8% from an anticipated boost in Chinese demand for European goods. Fiat Chrysler Automobiles shares climbed 10% after the car maker changed the terms of its merger with PSA Group to preserve cash.
The yield on 10-year U.S. Treasury bonds ticked up to 0.676%, from 0.669% on Monday.
Karen Langley contributed to this article.
Write to Anna Hirtenstein at email@example.com