Icahn Ends Campaign to Stop Cigna/Express Scripts Merger

U.S. stocks are rallying Tuesday as smaller companies and retailers make big gains. Major indexes are recovering most of their recent losses as worries about Turkey’s currency crisis eased. Global markets have taken two days of losses as investors worried that Turkey’s troubles might spread.

KEEPING SCORE: The S&P 500 index climbed 18 points, or 0.64 percent, to 2,839. The Dow Jones Industrial Average gained 112 points, or 0.45 percent, to 25,299. The Nasdaq composite added 51 points, or 0.7 percent, to 7,870. The Russell 2000 index advanced 17.25 points, or 1 percent, to 1,692.

The S&P 500 fell a combined 1.1 percent Friday and Monday as investors worried that Turkey’s financial woes would affect other countries.

WEAVING A WIN: Tapestry, the parent company of Coach and Kate Spade, jumped after its fourth-quarter results surpassed analyst estimates. The stock surged 12.1 percent to $53.22.

Elsewhere Advance Auto Parts jumped 6.9 percent to $156.47 after its quarterly report. Competitor AutoZone picked up 3.8 percent to $756.845 and O’Reilly Automotive rose 2.9 percent to $323.43.

CALM: The Turkish lira stabilized as officials from Turkey and the U.S. said the countries are in talks to ease diplomatic tensions which have resulted in high tariffs on Turkish steel and aluminum. Economists say Turkey’s central bank still needs to raise interest rates significantly to strengthen its currency. President Recep Tayyip Erdogan has ruled out that step.

Emerging markets fell Monday on concern that Turkey’s currency turmoil could spread. The Argentine peso and India’s rupee hit record lows against the dollar. Those jitters eased later Tuesday.

THE QUOTE: Invesco Chief Global Market Strategist Kristina Hooper said it’s common for stocks to fall across emerging markets when one country is in trouble, but that reaction isn’t necessarily justified.

“What we’re seeing in emerging markets today is a repeat of what we’ve seen crisis after crisis for the last few decades,” Hooper said. “We can’t treat all emerging markets the same way.”

Hooper said Argentina, like Turkey, is dealing with a plunging currency and political turmoil. But most of Turkey’s problems are specific to that country and other emerging markets like Mexico are likely to recover.

SMALL, BUT GOING BIG: Smaller and medium-sized companies fared better than big U.S. multinationals. Footwear maker Wolverine World Wide gained 2.5 percent to $38.45 and watchmaker Fossil rose 5 percent to $25.73.

Boston Beer picked up 4.2 percent to $292.10 and RV maker Thor Industries rose 2.7 percent to $97.15.

Hooper said investors are shifting money into more U.S.-focused companies in response to the Trump administration’s aggressive handling of its dispute with Turkey, a longtime member of NATO.

“This is a reminder that the U.S. is a very different country than it was just a few years ago,” she said.

The U.S. said it would double its taxes on Turkish steel and aluminum as it pushes Turkey to release a pastor who is being tried on espionage and terrorism-related charges. The U.S. says the charges are fabricated.

I-CAHN’T STOP YOU: Cigna and Express Scripts both rose after billionaire investor Carl Icahn said he’s ending his campaign to block the deal. He had urged Cigna shareholders to vote against the $52 billion acquisition of Express Scripts and said the price was far too high.

Health insurer Cigna added 1.7 percent to $184.87 and pharmacy benefits manager Express Scripts picked up 1.8 percent to $85.55.

WATER WORKING: SJW Group rose 7.2 percent to $66.87 after California Water Service Group made a new offer to buy it. The new bid values the parent of San Jose Water at $70 a share, or $1.44 billion. The company said its board will review the offer.

Cal Water gained 0.9 percent to $40.41. Its previous offer valued SJW Group at $68.25 per share.

BONDS: Bond prices moved lower. The yield on the 10-year Treasury note rose to 2.89 percent from 2.88 percent.

ENERGY: Benchmark U.S. crude slipped 0.2 percent to $67.04 per barrel in New York. Brent crude, used to price international oils, dipped 0.2 percent to $72.46 per barrel in London.

Wholesale gasoline picked up 1 percent to $2.03 a gallon. Heating oil lost 0.4 percent to $2.13 a gallon. Natural gas rose 1 percent to $2.96 per 1,000 cubic feet.

METALS: Gold added 0.2 percent to $1,200.70 an ounce. Silver rose 0.5 percent to $15.05 an ounce. Copper fell 1.8 percent to $2.68 a pound following weak economic reports from China. Growth in factory output, consumer spending and retail sales in July were slower than expected.

CURRENCY: The dollar rose to 111.22 yen from 110.69 yen. The euro fell to $1.1339 from $1.1394.

OVERSEAS: Germany’s DAX rose less than 0.1 percent. The CAC 40 in France fell 0.2 percent and Britain’s FTSE 100 lost 0.4 percent.

Tokyo’s Nikkei 225 added 2.3 percent. Hong Kong’s Hang Seng declined 0.7 percent while Seoul’s Kospi advanced 0.5 percent.