Stocks moved mostly higher over the course of the trading day on Tuesday, although buying interest was somewhat subdued. The markets benefited from a positive reaction to upbeat consumer confidence data, which overshadowed some other disappointing data.
The major averages all ended the day in positive territory, with the Dow closing above 13,000 for the first time since May of 2008. The Dow edged up 23.61 points or 0.2 percent to 13,005.12, the Nasdaq rose 20.60 points or 0.7 percent to 2,986.76 and the S&P 500 climbed 4.59 points or 0.3 percent to 1,372.18.
Much of the strength on Wall Street stemmed from the release of a report from the Conference Board showing a substantial improvement in consumer confidence 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 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.
Among individual stocks, Priceline.com (PCLN) rose by 7 percent after the 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) also moved higher on the day after reporting fourth quarter earnings that came in above analyst estimates.
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 showed a lack of direction over the course of the trading day, closing nearly flat. The yield on the benchmark ten-year note, which moves opposite of its price, edged up by less than a basis point to 1.929 percent.
Recovering from the weakness seen last week, airline stocks showed a particularly strong move to the upside on the day. The NYSE Arca Airline Index surged up by 2.4 percent, climbing further off last Friday's one-month closing low.
The strength in the oil-sensitive airline sector came amid a continued pullback by the price of crude oil, with crude for April delivery sliding $2.01 to $106.55 a barrel.
Gold stocks also saw significant strength, moving higher along with the price of the precious metal. With gold for April delivery climbing $13.50 to $1,788.40 an ounce, the NYSE Arca Gold Bugs Index ended the day up by 2.2 percent.
Considerable strength was also visible among semiconductor stocks, as reflected by the 1.6 percent gain posted by the Philadelphia Semiconductor Index. Micron (MU) jumped 3.7 percent after reaching an agreement to expand its NAND Flash memory joint venture relationship with Intel (INTC).
On the other hand, housing stocks came under pressure on the heels of the disappointing home price data, dragging the Philadelphia Housing Sector Index down by 1.2 percent. Commercial real estate stocks also saw some weakness on the day.
Trading on Wednesday could be impacted by a number of factors, including the European Central Bank's long term refinancing operation and Federal Reserve Chairman Ben Bernanke's testimony before the House Financial Services Committee.
U.S. reports on fourth quarter GDP and Chicago-area manufacturing activity could also impact trading along with the Fed's Beige Book report.
On the earnings front, Costco (COST) and Staples (SPLS) are among the companies due to report their quarterly results before the start of trading on Wednesday.
by RTT Staff Writer
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