After initially showing a lack of direction, stocks moved mostly higher over the course of the abbreviated trading session on Tuesday. The markets benefited from an upbeat report on factory orders as well as a rally by commodities prices.
The major averages saw some volatility in the final hour of trading but closed firmly in positive territory. The Dow rose 72.43 points or 0.6 percent to 12,943.82, the Nasdaq advanced 24.85 points or 0.8 percent to 2,976.08 and the S&P 500 climbed 8.51 points or 0.6 percent to 1,374.02.
With the gains on the day, the major averages all ended the session at their best closing levels in well over a month.
The strength that emerged on Wall Street was partly due to the release of a report from the Commerce Department showing a bigger than expected increase in factory orders in the month of May.
The report showed that factory orders rose by 0.7 percent in May following two consecutive monthly decreases. Economists had expected orders to edge up by 0.1 percent.
With the stronger than expected growth, the report eased some of the concerns raised by Monday's report from the Institute for Supply Management showing a contraction in manufacturing activity.
The markets also benefited from news of strong sales by U.S. automakers in the month of June. Ford (F) reported a 7 percent increase in June sales, while sales by General Motors (GM) and Chrysler jumped by 16 percent and 20 percent, respectively.
Nonetheless, trading activity remained relatively subdued, with traders looking to get a head start on the Independence Day holiday on Wednesday.
Uncertainty about Friday's monthly jobs report also helped to keep traders on the sidelines along with upcoming monetary policy announcements from Europe.
Among individual stocks, shares of Microsoft (MSFT) ended the day moderately higher after the software giant announced that it will take a $6.2 billion charge for the impairment of goodwill in its Online Services Division segment, mostly related to its 2007 acquisition of aQuantive.
While most of the major sectors moved to the upside, significant strength was visible among oil service stocks. Reflecting the strength in the strength in the oil service sector, the Philadelphia Oil Service Index surged up by 4 percent to a one-month closing high.
The strength among oil service stocks came amid a substantial increase by the price of crude oil, with crude for August delivery jumping $3.80 to $87.55 a barrel.
Similarly, gold stocks saw considerable strength amid a notable increase by the price of the precious metal. With gold for August delivery climbing $24.50 to $1,622.20 an ounce, the NYSE Arca Gold Bugs Index soared 3.6 percent.
Technology stocks also posted strong gains, with computer hardware, semiconductor, and networking stocks turning in some of the best performances. On the other hand, airline and health insurance stocks saw moderate weakness on the day.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Tuesday, benefiting from optimism about the possibility of further stimulus. Japan's Nikkei 225 Index advanced by 0.7 percent, while Hong Kong's Hang Seng Index surged up by 1.5 percent.
The major European markets also showed strong moves to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.8 percent, the French CAC 40 Index and the German DAX Index jumped by 1 percent and 1.3 percent, respectively.
In the bond market, treasuries moved moderately lower after ending the previous session notably higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.8 basis points to 1.628 percent.
Following the Independence Day holiday on Wednesday, trading activity may pick up on Thursday amid monetary policy announcements from the European Central Bank and the Bank of England.
Traders are also likely to keep an eye on reports on private sector employment, weekly jobless claims, and service sector activity.
by RTT Staff Writer
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