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Stocks Close Mostly Higher, Dow And S&P 500 Set Record Highs - U.S. Commentary

Stocks Close Mostly Higher, Dow And S&P 500 Set Record Highs - U.S. Commentary
4/2/2013 4:25 PM ET

After moving notably higher in early trading on Tuesday, stocks continued to perform well throughout the trading session. While buying interest waned in the afternoon, the markets managed to maintain a positive bias on the day.

The major averages ended the day firmly positive, with the Dow and the S&P 500 at new record closing highs. The Dow advanced 89.16 points or 0.6 percent to 14,662.01, the Nasdaq rose 15.69 points or 0.5 percent to 3,254.86 and the S&P 500 climbed 8.08 points or 0.5 percent to 1,570.25.

The strength on Wall Street was partly due to a substantial rally by health insurance stocks, which extended the substantial upward move seen late in the previous session.

The gains by health insurance stocks came on the heels of news that the Centers for Medicare & Medicaid Services will increase the Medicare Advantage payment rate by 3.3 percent in 2014, scrapping the 2.3 percent cut announced in February.

Positive sentiment was also generated by the release of a Commerce Department report showing a notable rebound in factory orders in the month of February.

The report said factory orders surged up by 3.0 percent in February following a revised 1.0 percent decrease in January. Economists had expected orders to increase by 2.9 percent.

Excluding a jump in orders for transportation equipment, factory orders edged up by 0.3 percent in February compared to a 2.0 percent increase in January.

Traders also kept an eye on developments in Europe, where Cyprus was reportedly given an additional two years to meet the conditions of its bailout agreement.

Meanwhile, the markets largely shrugged off a pair of reports showing a continued contraction in European manufacturing activity as well as Eurozone unemployment at a record high.

Among individual stocks, BGC Partners (BGCP) posted a standout gain after announcing an agreement to sell its electronic bond-trading platform to Nasdaq (NDAQ) for $750 million in cash. Shares of BGC surged up by 48.6 percent.

Nuance Communications (NUAN) also turned in a strong performance on news that billionaire investor Carl Icahn has taken a 9.3 percent stake in the in speech recognition and digital imaging software developer.

On the other hand, shares of Hewlett-Packard (HPQ) came under pressure after Goldman Sachs downgraded its rating on the PC giant to Sell from Neutral.

Sector News

As mentioned above, health insurance stocks turned in some of the market's best performances on the day. Reflecting the strength in the sector, the Morgan Stanley Healthcare Payor Index surged up by 2.7 percent to a record closing high.

Considerable strength was also visible among biotechnology stocks, as reflected by the 1.3 percent gain posted by the NYSE Arca Biotechnology Index. The index also reached a record closing high amid strong gains by Dendreon (DNDN), Amgen (AMGN), and Regeneron (REGN).

Pharmaceutical and retail stocks also moved higher on the day, with the strength among pharmaceutical stocks lifting the NYSE Arca Pharmaceutical Index to a twelve-year closing high.

Meanwhile, gold stocks moved sharply lower over the course of the trading day, dragging the NYSE Arca Gold Bugs Index down by 4.2 percent. A steep drop by the price of gold contributed to the weakness in the sector, with gold for June delivery falling $25 to $1,575.90 an ounce.

Significant weakness also emerged among airline stocks, as reflected by the 3.8 percent loss posted by the NYSE Arca Airline Index. SkyWest (SKWY) and Delta (DAL) posted notable losses.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Tuesday. While Japan's Nikkei 225 Index fell by 1.1 percent, Hong Kong's Hang Seng Index rose by 0.3 percent.

Meanwhile, the major European markets all showed strong moves to the upside on the day. The U.K.'s FTSE 100 Index jumped by 1.2 percent, while the German DAX Index and the French CAC 40 Index surged up by 1.9 percent and 2 percent, respectively.

In the bond market, treasuries gave back some ground after turning higher over the course of the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.1 basis points to 1.861 percent.

Looking Ahead

U.S. economic data may attract attention on Wednesday, with traders likely to keep an eye on reports on private sector employment and service sector activity.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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