Plus   Neg

Stocks Trading Higher On Upbeat Consumer Confidence Data - U.S. Commentary

After showing a lack of direction in early trading, stocks have moved mostly higher over the course of the trading day on Tuesday. The markets have benefited from an upbeat consumer confidence report, which has overshadowed some other disappointing data.

The major averages have moved roughly sideways in recent trading, hovering in positive territory. The Dow is up 24.82 points or 0.2 percent at 13,006.33, the Nasdaq is up 19.30 points or 0.7 percent at 2,985.46 and the S&P 500 is up 4.44 points or 0.3 percent at 1,372.03.

The strength that has emerged on Wall Street is due in large part to the release of a report from the Conference Board showing that its consumer confidence index rose by much more than expected in the month of February.

The Conference Board said its consumer confidence index jumped to 70.8 in February from a revised 61.5 in January. Economists had been expecting the index to increase to a reading of 64.0 from the 61.1 that had been reported for the previous month.

With the much bigger than expected increase, the consumer confidence index reached its best level since coming in at 72.0 in February of 2011.

The upbeat consumer confidence data helped to overshadow a separate report from the Commerce Department showing a steep drop in durable goods orders in the month of January.

The report showed that durable goods orders fell by 4.0 percent in January following a revised 3.2 percent increase in December. Economists had been expecting a much more modest decrease of about 0.7 percent.

Excluding a 6.1 percent drop in orders for transportation equipment, durable goods orders still fell by 3.2 percent in January compared to a 2.1 percent increase in December.

Standard & Poor's also released a report before the start of trading showing a bigger than expected drop in home prices in major U.S. metropolitan areas in the month of December.

The markets have also benefited from optimism about the impact of the European Central Bank's long term refinancing operation. The LTRO, which essentially extends cheap financing to banks, is due on Wednesday.

In other news out of Europe, Irish Prime Minister Enda Kenny said that Ireland will hold a referendum on Europe's new fiscal treaty, which calls for stricter budget discipline.

Among individual stocks, Priceline.com (PCLN) is up by 7 percent after online travel company reported better than expected fourth quarter results and forecast better than expected first quarter earnings.

Office supplies retailer Office Depot (ODP) and auto parts retailer AutoZone (AZO) are also trading higher after reporting fourth quarter earnings that came in above analyst estimates.

Sector News

While most of the most sectors are showing relatively modest moves, considerable strength has emerged among semiconductor stocks. Reflecting the strength in the semiconductor sector, the Philadelphia Semiconductor Index has surged up by 1.9 percent.

Spreadtrum Communications (SPRD) and Cree (CREE) are turning in two of the sector's best performances, with both advancing by 7.7 percent.

Gold stocks have also shown a strong move to the upside on the day, driving the NYSE Arca Gold Bugs Index up by 1.6 percent. The strength in the gold sector comes as gold for April delivery is climbing $9.60 to $1,784.50 an ounce.

Airline, brokerage, and electronic storage stocks are also seeing notable strength, while significant weakness is visible among railroad stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index advanced by 0.9 percent, while Hong Kong's Hang Seng Index surged up by 1.7 percent.

The major European markets saw some volatility in afternoon trading but also ended the day on the upside. While the German DAX Index rose by 0.6 percent, the French CAC 40 Index climbed by 0.4 percent, and the U.K.'s FTSE 100 edged up by 0.2 percent.

In the bond market, treasuries have pulled back near the unchanged line after seeing modest strength earlier in the day. The yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 1.927 percent after hitting a low of 1.896 percent.

by RTTNews Staff Writer

For comments and feedback: editorial@rttnews.com

Market Analysis

Follow RTT