Dow rallies more than 500 points for a second day, closes above 25,000 for first time since March

Stocks rose for a second day on Wednesday as Wall Street grew more optimistic about the economy reopening.  Shares of companies that benefit from the economic restart led the way.

The Dow Jones Industrial Average jumped 553.16 points, or 2.2%, to 25,548.27. The 30-stock average also closed above 25,000 for the first time since March. 

The S&P 500 closed up by 1.5% at 3,036.13 after briefly trading lower. That recovery put the S&P 500 back above its 200-day moving average — a key level watched by traders — and over the 3,000 mark for the first time since March on a closing basis. The Nasdaq Composite gained 0.8% to end the day at 9,412.36.

Bank stocks rose broadly. JPMorgan Chase was up 5.8% while Citigroup advanced 8.5%. The SPDR S&P Bank ETF (KBE) gained 7% along with the SPDR S&P Regional Banking ETF (KRE). Both ETFs were on pace for their best weekly performances since April. 

Stocks that benefited from people staying at home struggled on Wednesday as investors rotated out of those names. Zoom Video dropped 1.2%. Shopify, Amazon and Teladoc Health fell 2.3%, 0.6% and 1.1%, respectively. 

"This is a rotation that we should get used to," said Art Hogan, chief market strategist at National Securities. He noted the broader indexes could be under pressure at the start of it since some of the stay-at-home names make up a big chunk of the S&P 500's market cap. 

"It's not necessarily index positive when that mean reversion happens, but it's certainly much better to have this rally broaden out," Hogan said. 

The S&P 500 was up more than 38% from an intraday low reached on March 23 as news around the economy and a potential coronavirus vaccine improve. The major averages were coming off strong gains in the previous session, with the Dow also jumping more than 500 points on Tuesday.

All 50 states in the U.S. have reopened their economies to some extent. On Tuesday, New Jersey Gov. Phil Murphy said the state would allow professional sports teams to resume practice and competitions.

 "The market has been making a V-pattern upward and there's been a tremendous amount of skepticism around that but we are just starting now to see some evidence in the data turning," said Michael Darda, MKM Partners chief market strategist and chief economist. "Some better than expected housing numbers. As reopening gets underway, virtually all states now we are starting to see activity bounce off of very low levels."

On Wednesday, the Mortgage Bankers Association reported a sixth-straight weekly rise in mortgage applications. Data released Tuesday showed new home sales in April topped estimates. Sales of new U.S. single-family homes increased by 623,000 last month, beating estimates of 490,000, according to Dow Jones.

Meanwhile, biotech company Novavax said Monday it started the first human study of its experimental coronavirus vaccine.

Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said Wednesday the U.S. could avoid a second wave of coronavirus later this year.

"For the first time in this crisis, we are being bombarded by good news," Jim Paulsen, chief investment strategist at the Leuthold Group told CNBC.

However, stocks' recent strength — last week the Dow had its best week since early April — still leaves the Dow down more than 10% in 2020. The S&P 500 is off 6% for the year and the tech-heavy Nasdaq is up more than 4%. 

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