Stocks Close Mostly Higher Ahead Of Holiday - U.S. Commentary

(RTTNews) - While trading activity was somewhat subdued ahead of Christmas, stocks moved mostly higher during trading on Tuesday. The markets benefited from a positive reaction to a pair of better than expected economic reports.

The major averages closed moderately higher, near their best levels of the day. The Dow climbed 62.94 points or 0.4 percent to 16,357.55, the Nasdaq edged up 6.51 points or 0.2 percent to 4,155.42 and the S&P 500 rose 5.33 points or 0.3 percent to 1,833.32.

The gains on the day lifted the Dow and the S&P 500 to new record closing highs, while the Nasdaq once again reached its best levels since 2000.

The strength on Wall Street was partly due to the release of a report from the Commerce Department showing that durable goods orders rose by much more than expected in the month of November.

The report said durable goods orders surged up by 3.5 percent in November following a revised 0.7 percent decrease in October. Economists had expected orders to increase by about 2.0 percent.

Excluding an 8.4 percent jump in orders for transportation equipment, durable goods orders still rose by 1.2 percent in November compared to economist estimates for a 0.7 percent increase.

Amna Asaf, an economist at Capital Economics, said the better than expected jump in durable goods orders "suggests that fourth-quarter business investment in equipment may have picked up a bit."

A separate report from the Commerce Department showed a drop in new home sales in November, although sales still came in above economist estimates due to an upward revision to the October data.

The report said new home sales fell 2.1 percent to a seasonally adjusted annual rate of 464,000 in November from the revised October rate of 474,000. With the upward revision, the annual rate seen in October reflected the highest since July of 2008.

Economists had expected new home sales to climb to edge up to 450,000 from the 444,000 originally reported for the previous month.

Nonetheless, trading activity was somewhat subdued as many investors stayed on the sidelines ahead of the early close for the markets at 1 pm ET. The Christmas Day holiday on Wednesday also kept some traders away from their desks.

Sector News

Gold stocks showed a substantial move to the upside over the course of the trading day, driving the NYSE Arca Gold Bugs Index up by 3 percent. With the gain, the index climbed further off the five-year closing low that it set last Friday.

The rally by gold stocks came amid a moderate increase by the price of the previous metal, with gold for February delivery rising $6.20 to $1,203.20 an ounce.

Notable strength also emerged among steel stocks, as reflected by the 1.1 percent gain posted by the NYSE Arca Steel Index. The gain lifted the index to a ten-month closing high.

Oil service, chemical, and software stocks also saw some strength on the day, while most of the other major sectors showed more modest moves.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index edged up by 0.1 percent following a holiday on Monday, while Hong Kong's Hang Seng Index surged up by 1.1 percent.

The major European markets also saw modest strength amid an abbreviated trading session. The U.K.'s FTSE 100 Index and the French CAC 40 Index inched up by 0.2 percent and 0.1 percent, respectively. The German markets remained closed on the day.

In the bond market, treasuries moved to the downside, extending the pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 5.4 basis points to 2.983 percent.

Looking Ahead

Following the holiday on Wednesday, trading activity is likely to remain relatively subdued when the markets reopen on Thursday, although the Labor Department's weekly jobless claims report may still attract some attention.