U.S. Stocks Move Sharply Higher Following Recent Weakness

Stocks moved sharply higher over the course of the trading session on Tuesday, regaining ground following recent weakness. The major averages initially showed a lack of direction but climbed firmly into positive territory as the day progressed.

The major averages reached new highs in the final hour of trading, ending the session near their best levels of the day. The Dow jumped 499.51 points or 1.5 percent to 34,911.20, the Nasdaq spiked 287.30 points or 2.2 percent to 13,619.66 and the S&P 500 surged 70.52 points or 1.6 percent to 4,462.21.

The rally on Wall Street may partly have reflected bargain hunting after the modest drop seen on Monday dragged the Nasdaq and the S&P 500 down to their lowest closing levels in a month.

Traders also reacted positively to some of the latest earnings news, with Hasbro (HAS) posting a strong gain after the toy maker reported first quarter earnings that missed analyst estimates but raised its full-year profit forecast.

Shares of Johnson & Johnson (JNJ) also showed a strong move to the upside after the healthcare giant reported better than expected first quarter earnings. Traders seemed to shrug off J&J’s lower full-year guidance.

On the other hand, insurance giant Travelers (TRV) moved sharply lower despite reporting earnings that beat analyst estimates.

In U.S. economic news, the Commerce Department released a report showing new residential construction expectedly saw modest growth in the month of March.

The report showed housing starts rose by 0.3 percent to an annual rate of 1.793 million in March after spiking by 6.5 percent to a revised rate of 1.788 million in February.

The uptick surprised economists, who had expected housing starts to fall by 1.4 percent to a rate of 1.745 million from the 1.769 million originally reported for the previous month.

The Commerce Department said building permits also climbed by 0.4 percent to an annual rate of 1.873 million in March after slumping by 1.6 to a revised rate of 1.865 million in February.

Building permits, an indicator of future housing demand, had been expected tumble by 1.8 percent to a rate of 1.825 million from the 1.859 million originally reported for the previous month.

Sector News

Housing stocks moved sharply higher following the upbeat housing starts data, driving the Philadelphia Housing Sector Index up by 3.4 percent.

Substantial strength was also visible among airline stocks, with the NYSE Arca Airline Index soaring by 3.2 percent to its best closing level in almost two months.

The rally by airline stocks came after a federal judge in Florida struck down the Biden administration’s mask mandate for airplanes and other public transportation.

Retail stocks also saw considerable strength on the day, resulting in a 2.8 percent jump by the Dow Jones U.S. Retail Index.

Financial, semiconductor and commercial real estate stocks also moved notably higher, while gold and oil service stocks bucked the uptrend amid sharp declines by the prices of the associated commodities.

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 advanced by 0.7 percent, while Hong Kong’s Hang Seng Index plunged by 2.3 percent.

Meanwhile, European stocks climbed off their worst levels of the day but still closed mostly lower. While the French CAC 40 Index slid by 0.8 percent, the U.K.’s FTSE 100 Index and the German DAX Index

In the bond market, treasuries extended the downward trend seen over the past several weeks. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.1 basis points to 2.913 percent.

Looking Ahead

Earnings news is likely to remain in focus on Wednesday, with IBM Corp. (IBM) and Netflix (NFLX) among the companies reporting their quarterly results after the close of today’s trading.

Consumer products giant Procter & Gamble (PG) is also among the companies due to report their results before the start of trading on Wednesday.

A report on existing home sales may also attract attention along with the Federal Reserve’s Beige Book, which could provide additional clues about the outlook for monetary policy.

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