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Major Averages Close Firmly Positive, Nasdaq Outperforms - U.S. Commentary

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After ending the previous session mostly lower, stocks moved back to the upside during the trading day on Tuesday. The major averages fluctuated as the day progressed but maintained a positive bias throughout most of the session.

The major averages all closed notably higher, although the tech-heavy Nasdaq outperformed its counterparts. While the Nasdaq soared 117.92 points or 1.7 percent to 7,023.83, the S&P 500 jumped 27.69 points or 1.1 percent to 2,610.30 and the Dow climbed 155.75 points or 0.7 percent to 24,065.59.

The Nasdaq benefited from a significant advance by shares of Netflix (NFLX), with the video streaming giant surging up by 6.5 percent.

The jump by Netflix came after the company revealed the biggest increase in subscription prices since launching its service twelve years ago.

Tech giant Apple (AAPL) also posted a notable gain on news a German court has thrown out a parent lawsuit filed against the company by chipmaker Qualcomm (QCOM).

Meanwhile, traders were also digesting mixed earnings news from financial giants JPMorgan Chase (JPM) and Wells Fargo (WFC).

JPMorgan reported fourth quarter earnings that missed analyst estimates on weaker than expected bond-trading revenue, while Wells Fargo reported better than expected fourth quarter earnings but its revenues for the quarter came in below expectations.

On the U.S. economic front, a report released by the Labor Department showed a modest decrease in producer prices in the month of December,

The Labor Department said its producer price index for final demand dipped by 0.2 percent in December after inching up by 0.1 percent in November. Economists had expected prices to slip by 0.1 percent.

Excluding food and energy prices, core producer prices edged down by 0.1 percent in December after climbing by 0.3 percent in November. Core prices had been expected to rise by 0.2 percent.

A separate report released by the Federal Reserve Bank of New York showed New York manufacturing activity grew at its slowest pace in over a year in the month of January.

The New York Fed said its general business conditions index slumped to 3.9 in January after tumbling to a revised 11.5 in December.

A positive reading still indicates growth, although economists had expected the index to show a much more modest decrease to 10.8.

Sector News

Biotechnology stocks showed a substantial move to the upside over the course of the trading session, resulting in a 2.5 percent spike by the NYSE Arca Biotechnology. With the jump, the index reached its best closing level in well over a month.

Exelixis (EXEL) posted a standout gain after the FDA approved the biotech company's Cabometyx tablets for patients with hepatocellular carcinoma who have been previously treated with sorafenib.

Significant strength was also visible among software stocks, with the Dow Jones Software Index surging up by 2.3 percent to a one-month closing high.

Healthcare, retail, and networking stocks also saw considerable strength on the day moving higher along with most of the other major sectors.

Meanwhile, gold stocks bucked the uptrend, dragging the NYSE Arca Gold Bugs Index down by 2.7 percent. The weakness in the sector came as gold for February delivery fell $2.90 to $1,288.40 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index jumped by 1 percent, while Hong Kong's Hang Seng Index surged up by 2 percent.

The major European markets also moved to the upside on the day. While the German DAX Index rose by 0.3 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index advanced by 0.5 percent and 0.6 percent, respectively.

In the bond market, treasuries showed a lack of direction for much of the session before closing roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 2.711 percent.

Looking Ahead

Earnings news will continue to attract attention on Wednesday, as Bank of America (BAC) and Goldman Sachs (GS) are among the companies releasing their quarterly results before the start of trading.

Traders are also likely to keep an eye on reports on import and export prices and homebuilder confidence as well as the Federal Reserve's Beige Book.

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