U.S. Stocks Close Sharply Higher, Capping Off Best Quarter In Decades

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Extending the strong upward move seen in the previous session, stocks moved notably higher over the course of the trading day on Tuesday. The Dow saw some volatility before eventually joining the broader Nasdaq and S&P 500 firmly in positive territory.

The major averages pulled back off their highs going into the close but held on to strong gains. The Dow jumped 217.08 points or 0.9 percent to 25,812.88, the Nasdaq spiked 184.61 points or 1.9 percent to 10,058.77 and the S&P 500 surged up 47.05 points or 1.5 percent to 3,100.29.

The rally on Wall Street capped off one of the best quarters for the markets in decades, with the Dow soaring by 17.8 percent for its biggest quarterly gain since 1987.

Traders continued to express optimism about the economic outlook despite the continued spike in new coronavirus cases across several states.

Adding to the positive sentiment, the Conference Board released a report showing a bigger than expected improvement in consumer confidence in the month of June.

The Conference Board said its consumer confidence index jumped to 98.1 in June from a downwardly revised 85.9 in May.

Economists had expected the consumer confidence index to climb to 90.0 from the 86.6 originally reported for the previous month.

"The re-opening of the economy and relative improvement in unemployment claims helped improve consumers' assessment of current conditions," said Lynn Franco, Senior Director of Economic Indicators at The Conference Board.

Meanwhile, a separate report released by MNI Indicators showed a continued contraction in Chicago-area business activity in the month of June.

MNI Indicators said its Chicago business barometer rose to 36.6 in June from 32.3 in May, but a reading below 50 still indicates a contraction in regional business activity. Economists had expected the index to jump to 45.0.

Traders also kept an eye on Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin's testimony before the House Financial Services Committee regarding the response to the coronavirus pandemic.

In prepared remarks, Powell noted that output and employment remain far below their pre-pandemic levels and cautioned that the outlook for the economy is "extraordinarily uncertain."

"A full recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities," Powell said.

He added, "The path forward will also depend on the policy actions taken at all levels of government to provide relief and to support the recovery for as long as needed."

Sector News

Gold stocks moved sharply higher over the course of the session, driving the NYSE Arca Gold Bugs Index up by 3.5 percent to its best closing level in over a month.

The rally by gold stocks came amid a significant increase by the price of the precious metal, with gold for August delivery jumping $19.30 to a nearly nine-year high of $1,800.50 an ounce.

Substantial strength was also visible among semiconductor stocks, as reflected by the 2.7 percent spike by the Philadelphia Semiconductor Index.

Micron Technology (MU) helped to lead the sector higher after the chip maker reported fiscal third quarter results that exceeded estimates and provided upbeat revenue guidance.

Oil service stocks also saw considerable strength on the day, with the Philadelphia Oil Service Index surging up by 2.5 percent despite a decrease by the price of crude oil.

Software, banking, and natural gas stocks also showed strong moves to the upside, while airline stocks were among the few groups to buck the uptrend.

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 1.3 percent, while China's Shanghai Composite Index advanced by 0.8 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index rose by 0.6 percent, the French CAC 40 Index fell by 0.2 percent and the U.K.'s FTSE 100 Index slumped by 0.9 percent.

In the bond market, treasuries turned lower over the course of the session after seeing initial strength. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.7 basis points to 0.653 percent.

Looking Ahead

Trading on Wednesday may be impacted by reaction to reports on private sector employment and manufacturing activity, while the minutes of the latest Fed meeting may also attract some attention.

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