Stocks Extend Recent Upward Move On Upbeat Economic Data - U.S. Commentary

(RTTNews) - After moving mostly higher in early trading, stocks continued to perform well throughout the trading day on Tuesday. The gains on the day extended the recent upward move by the markets, with the S&P 500 reaching a new record closing high.

While the major averages all closed firmly in positive territory, the tech-heavy Nasdaq outperformed its counterparts. The Nasdaq jumped 51.26 point or 1.2 percent to 4,237.07, while the Dow rose 69.23 point or 0.4 percent to 16,675.50 and the S&P 500 climbed 11.38 points or 0.6 percent to 1,911.91.

The strength on Wall Street was partly due to the release of a report from the Commerce Department showing an unexpected increase in durable goods orders in the month of April.

Before the start of trading, the Commerce Department said durable goods orders increased by 0.8 percent in April after surging up by an upwardly revised 3.6 percent in March.

The continued growth came as a surprise to economists, who had expected orders to drop by 0.7 percent compared to the 2.9 jump that had been reported for the previous month.

Excluding an increase in orders for transportation equipment, durable goods orders edged up by a more modest 0.1 percent in April.

Positive sentiment was also generated by a separate report from the Conference Board showing that consumer confidence improved in line with economist estimates in the month of May.

The Conference Board said its consumer confidence index climbed to 83.0 in May from a downwardly revised 81.7 in April.

Economists had been expecting the index to edge up to 83.0 from the 82.3 originally reported for the previous month.

Additionally, a separate report from Standard & Poor's showed that home prices in major metropolitan areas rose more than expected in March.

Among individual stocks, shares of Hillshire Brands (HSH) moved sharply higher on the day after Pilgrim's Pride (PPC) offered to acquire the meat producer for approximately $6.4 billion. The offer values Hillshire at about $45 per share.

Sector News

Biotechnology stocks turned in a particularly strong performance on the day, driving the NYSE Arca Biotechnology Index up by 2 percent. With the gain, the index ended the session at its best closing level in almost two months.

Within the biotech sector, BioCryst Pharmaceuticals (BCRX) posted a standout gain after reporting positive results from a trial of its experimental drug for treating a rare immune disorder.

Considerable strength was also visible among networking stocks, as reflected by the 1.6 percent gain posted by the NYSE Arca Networking Index. The index also reached a nearly two-month closing high amid strong gains by Alcatel-Lucent (ALU) and Arris Group (ARRS).

Computer hardware, internet, and semiconductor also saw significant strength, contributing to the strong upward move by the tech-heavy Nasdaq.

While strength was also visible among financial stocks, gold stocks came under substantial selling pressure on the day amid a sharp drop by the price of the precious metal

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 crept up 0.2 percent, while Hong Kong's Hang Seng Index edged down by 0.1 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the French CAC 40 Index ticked up by 0.1 percent, the U.K.'s FTSE 100 Index and the German DAX Index rose by 0.4 percent and 0.5 percent, respectively.

In the bond market, treasuries turned higher over the course of the session after seeing early weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 1.8 basis points to 2.518 percent.

Looking Ahead

Amid a quiet day on the U.S. economic front, trading on Wednesday may be impacted by reaction to earnings news from companies such as Toll Brothers (TOL), Chico's FAS (CHS), and Cracker Barrel (CBRL), which are reporting their quarterly results before the start of trading.