After showing a strong upward move in early trading on Tuesday, stocks continued to perform well throughout the session. The rally lifted the Dow to a new record closing high, while the Nasdaq and the S&P 500 reached multi-year highs.
The major averages ended the session off their best levels of the day but still closed firmly in positive territory. The Dow rose 125.95 points or 0.9 percent to 14,253.77, the Nasdaq jumped 42.01 points or 1.3 percent to 3,224.13 and the S&P 500 advanced 14.59 points or 1 percent to 1,539.79.
The strength on Wall Street reflected a positive reaction to news from overseas as well as an upbeat report on U.S. service sector activity.
Easing concerns about the outlook for the global economy, outgoing Chinese Premier Wen Jiabao promised increased fiscal spending in a bid to deliver economic growth of 7.5 percent for 2013.
A relatively upbeat report on European service sector activity also generated some positive sentiment, with the index of activity in the sector coming in above estimates.
The report from Markit showed that its service sector activity index came in at 47.9 in February compared to the flash estimate of 47.3, although a reading below 50 indicates a continued contraction.
Meanwhile, the Institute for Supply Management released a report showing that activity in the U.S. service sector unexpectedly grew at a slightly faster rate in the month of February.
The ISM said its non-manufacturing index crept up to 56.0 in February from 55.2 in January, with a reading above 50 indicating growth in the service sector. The increase by the index came as a surprise to economists, who had expected it to dip to 55.0.
With the unexpected increase, the non-manufacturing index rose to its highest level since reaching 56.1 in February of 2012.
Most of the major sectors showed notable moves to the upside on the day, reflecting broad based buying interest on Wall Street.
Housing stocks turned in some of the market's best performances, resulting in a 2.1 percent gain by the Philadelphia Housing Sector Index. Radian Group (RDN) posted a standout gain, advancing by 6.3 following an upgrade by Barclays.
Significant strength was also visible among semiconductor stocks, as reflected by the 2 percent gain posted by the Philadelphia Semiconductor Index. Cree (CREE) helped to lead the sector higher, surging up by 14.4 percent after raising its third quarter guidance.
Oil service stocks also saw considerable strength, benefiting from an increase by the price of crude oil. With crude for April delivery climbing $0.70 to $90.82 a barrel, the Philadelphia Oil Service Index rose by 1.4 percent.
Transportation, defense, and computer hardware stocks also posted strong gains on the day, while some gold stocks bucked the uptrend.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index crept up by 0.3 percent and 0.1 percent, respectively, while China's Shanghai Composite Index jumped by 2.3 percent.
The major European markets also showed strong moves the upside on the day. While the U.K.'s FTSE 100 Index advanced by 1.4 percent, the French CAC 40 Index and the German DAX Index surged up by 2.1 percent and 2.3 percent, respectively.
In the bond market, treasuries ended the day modestly lower, extending the downward move seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.7 basis points to 1.894 percent.
Economic data is likely to remain in focus on Wednesday, with traders likely to keep an eye on reports on private sector employment and factory orders. The Federal Reserve's Beige Book report is also likely to attract some attention.
by RTT Staff Writer
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