The Standard & Poor’s 500 Index rose, reversing a drop of more than 1 percent amid mounting speculation Greece’s crisis will be contained. Emerging-market equities tumbled amid ongoing losses in China and a selloff in commodities, while the dollar strengthened.
The S&P 500 was up 0.6 percent by 4 p.m. in New York, rebounding from a retreat below its 200-day moving average. The Stoxx Europe 600 Index fell 1.6 percent, while the MSCI Emerging Markets Index sank 1.4 percent as crude oil to industrial metals dropped on concern Chinese demand is waning. The Bloomberg Dollar Spot Index rose 0.4 percent. Yields on 10-year Treasury notes declined three basis points to 2.26 percent, extending Monday’s 10 basis-point retreat.
Greece has been given until Sunday to put forward a new set of reform proposals to earn the bailout aid needed to bring its economy back from the brink. European leaders signaled they’ll propel the indebted nation out of the euro should the deadline not be met. Chinese shares traded in Hong Kong entered a bear market despite government measures aimed at stemming the rout, fueling anxiety over the outlook for commodities demand.
“We’re really starting to get over the fear of Greece,” said Brad McMillan, chief investment officer of Commonwealth Financial Network in Waltham, Massachusetts, which oversees $97 billion. “Economically it really doesn’t matter that much. It was a very real risk and pullbacks were rational. When you see a reaction to a market event and that event doesn’t seem to be having much impact at all, then that reaction can reverse very easily.”
The S&P 500 fell as much as 1.2 percent before bouncing back after falling through the 200-day average, an occurrence that has coincided with past rebounds. Stocks have only crossed the level once since 2012, during last October’s selloff, which gave way to an 11 percent advance at the end of 2014.
The index swung 39 points from its lowest to highest levels, the biggest reversal since a 45-point move on March 18.
Energy shares rebounded from earlier losses to rise 0.9 percent as oil pared a decline of more than 3.5 percent. West Texas Intermediate crude settled 0.4 percent lower at $52.33 a barrel. Consumer-staples shares jumped 2 percent, and utilities surged 2.5 percent as 10-year Treasury yields fell to a one-month low.
“The market is just showing its usual resilience and realizing that things aren’t that bad,” said Karyn Cavanaugh, a New York-based senior market strategist at Voya Investment Management LLC. Voya oversees $215 billion. “There was too much negativity. Oil’s coming back and the world’s not falling apart so the stock market feels a little more comfortable. It’s the reversal of an overreaction.”
European bonds also climbed amid speculation the region’s central bank will protect holders from a wider fallout from Greece. Bunds lead gains, with the 10-year rate down 12 basis points, or 0.12 percentage point, to 0.64 percent. Yields on Portugal’s bonds fell four basis points, while Italy’s slid 12 basis points.
Stocks in the euro region extended losses to a four-month low, after markets including Spain and France entered a correction Monday. The declines came before news that Greece had submitted a fresh proposal.
Greece has five days to present a plan for reforms, with German Chancellor Angela Merkel telling reporters she is “not especially optimistic” about the situation. The European Commission has a scenario for Greece exiting the currency union prepared in detail, President Jean-Claude Juncker said.
Before the deadline was set -- news that came after the close of U.S. markets -- Portugal’s PSI 20 Index fell 2.2 percent, bringing its two-day decline to 6 percent, the most since October. Italy’s FTSE MIB Index is down 6.9 percent this week. Greece’s stock market will remain closed on Tuesday and Wednesday after a bank holiday was extended.
A U.S.-listed exchange-traded fund tracking Greek stocks rose 2.4 percent Tuesday after tumbling as much as 4.9 percent, while American depositary receipts of National Bank of Greece SA pared a 9.9 percent retreat by two-thirds.
The euro weakened 0.4 percent to $1.0992 Tuesday, and touched $1.0916, its weakest level since June 2. The 19-nation currency slipped 0.4 percent to 134.93 yen.
The Bloomberg dollar index, which tracks the greenback against 10 major peers, rose for a third day, climbing to its highest closing level since June 1. The U.S. currency had its biggest gains versus currencies of commodity-producing nations, with the Australian and New Zealand dollars down at least 0.6 percent.
Industrial metals tumbled, with copper extending its biggest decline since January. Futures on the metal slipped to a six-year low, settling at $2.387 a pound in New York. Nickel in London dropped 9 percent to $10,650 a ton. Iron ore sank below $50 a ton for the first time since April.
Gold touched a 15-week low and silver slumped to the cheapest price in seven months as the strengthening dollar cut demand for precious metals as a store of value. Gold futures for August delivery dropped 1.8 percent to settle at $1,146.80 an ounce in New York. Silver ended 5 percent lower at $14.969 an ounce.
MSCI’s Emerging Markets Index dropped for a fifth day, with the Hang Seng China Enterprises Index, a gauge of Hong Kong-listed mainland Chinese shares, slid 3.3 percent. The index is down 20 percent from its May peak, meeting the common definition of a bear market. The Shanghai Composite Index lost 1.3 percent Tuesday amid a record drop in margin bets.
Sales of mainland shares through the Shanghai-Hong Kong exchange link swelled to an all-time high on Monday, while dual-listed shares in Hong Kong fell by the most since at least 2006 versus their mainland counterparts.
“What’s going on in China right now seems to be viewed as being somewhat isolated,” Michael Block, chief equity strategist at Rhino Trading Partners LLC in New York, said by phone. “I’m not sure that’s the case but the market is certainly treating in that way.”