Stocks Close Mostly Higher Following News Out Of Japan - U.S. Commentary

(RTTNews) - Stocks moved mostly higher over the course of the trading day on Tuesday after ending the previous session mixed. The gains lifted the Dow and the S&P 500 to new record closing highs, while the Nasdaq reached its best closing level since 2000.

The major averages pulled back off their best levels going into the close but remained in positive territory. The Dow edged up 40.07 points or 0.2 percent to 17,687.82, the Nasdaq advanced 31.44 points or 0.7 percent to 4,702.44 and the S&P 500 climbed 10.48 points or 0.5 percent to 2,051.80.

The on Wall Street partly reflected a positive reaction to news out of Japan, as Prime Minister Shinzo Abe said he is postponing a planned but unpopular sales tax increase for 18 months.

Abe also announced that he will dissolve parliament on Friday, paving the way for a general election in December. The call for a snap election generated optimism about new stimulus.

The latest news offset some of the negative sentiment generated by recent data showing the Japanese economy in recession.

Nonetheless, buying interest was somewhat subdued following the release of a Labor Department showing an unexpected increase in U.S. producer prices.

The Labor Department said its producer price index for final demand rose by 0.2 percent in October after edging down by 0.1 percent in September.

The modest increase in prices came as a surprise to economists, who had expected the index to dip by another 0.1 percent.

Excluding food and energy prices, the core producer price index climbed by 0.4 percent in October after coming in unchanged in the previous month. Core prices were expected to inch up by just 0.1 percent.

The data raised some concerns about the outlook for interest rates, although analysts noted that the price increase reflected a statistical quirk related to the effects of lower gasoline prices.

Among individual stocks, home improvement retailer Home Depot (HD) posted a notable loss, helping to limit the upside for the Dow.

The loss by Home Depot came even though the company reported better than expected third quarter results and reaffirmed its full-year guidance.

Sector News

Adding to the gains posted in the two previous sessions, gold stocks showed a substantial move to the upside on the day. Reflecting the strength in the gold sector, the NYSE Arca Gold Bugs Index surged up by 5.3 percent.

The rally by gold stocks came amid an increase by the price of the precious metal, with gold for December delivery climbing $13.60 to $1,197.10 an ounce.

Airline stocks also saw considerable strength on the day, with the NYSE Arca Airline Index jumping by 2.3 percent. United Continental (UAL) helped to lead the sector higher, soaring by 4.1 percent.

Significant strength was also visible among semiconductor stocks, as reflected by the 1.9 percent gain posted by the Philadelphia Semiconductor Index. The gain lifted the index to a two-month closing high.

Biotechnology, healthcare, telecom and chemical stocks also turned in strong performances, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index surged up by 2.2 percent, while Hong Kong's Hang Seng Index tumbled by 1.1 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the German DAX Index jumped by 1.6 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index advanced by 0.9 percent and 0.6 percent, respectively.

In the bond market, treasuries ended the session modestly higher following some early volatility. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.8 basis points at 2.322 percent.

Looking Ahead

A report on new residential construction may attract attention on Wednesday, although traders are also likely to keep a close eye on the minutes of the latest Fed meeting.

On the earnings front, retailers Lowe's (LOW), Target (TGT) and Staples (SPLS) are due to report their quarterly results before the start of trading on Wednesday.