With traders expressing optimism about the outcome of a crucial confidence vote in Greece, stocks moved sharply higher over the course of the trading day on Tuesday. The markets continued to recover from recent weakness, as traders picked up stocks at reduced levels.
The major averages remained firmly positive going into the close, ending the session near their best levels of the day. The Dow rose 109.63 points or 0.9 percent to 12,190.01, the Nasdaq jumped 57.60 points or 2.2 percent to 2,687.26 and the S&P 500 advanced 17.16 points or 1.3 percent to 1,295.52.
Much of the strength among stocks stemmed from optimism that Greek Prime Minister George Papandreou's reshuffled cabinet will survive the confidence vote, which is due to be held after the close of trading on Wall Street.
The confidence vote is a key step in Papandreou's efforts to win support for additional austerity measures. With Papandreou's socialist party holding a five-seat majority in the 300-member Greek parliament, the vote is widely expected to pass.
Miller Tabak equity strategist Peter Boockvar said, "We all hope that Papandreou gets a thumbs up tonight within the Greek government to continue on with the budget cuts that must be followed in order for the country to avoid an outright default by receiving the next round of money from the EU and IMF."
The markets also benefited from a positive reaction to a report from the National Association of Realtors showing a smaller than expected drop in existing home sales in May.
The report said existing home sales fell 3.8 percent to an annual rate of 4.81 million in May from a downwardly revised 5.00 million in April. Economists had expected existing home sales to fall by 5.9 percent to 4.75 million from the 5.05 million originally reported for the previous month.
Even though sales fell by less than expected, the annual rate of existing home sales in May was the lowest since a 4.64 million rate in November of 2010.
While acknowledging that current housing market activity indicates a very slow pace of broader economic activity, NAR chief economist Lawrence Yun said, "The pace of sales activity in the second half of the year is expected to be stronger than the first half."
Among individual stocks, Best Buy (BBY) rose by 2.7 percent after the consumer electronics retailer said its board has authorized a new $5 billion share repurchase program. The board also approved a 7 percent increase in Best Buy's quarterly cash dividend to $0.16 per share.
Sector News
Most of the major sectors showed notable moves to the upside on the day, reflecting broad based buying interest on Wall Street.
Gold stocks showed a substantial upward move, driving the NYSE Arca Gold Bugs Index up by 3.4 percent. The strength in the sector came as the price of gold moved higher for the sixth consecutive session, with gold for August delivery rising $4.40 to $1,546.40 an ounce.
Considerable strength was also visible among technology stocks, as reflected by the standout gain posted by the tech-heavy Nasdaq. Within the tech sector, internet, networking, and semiconductor stocks turned in some of the best performances.
Steel stocks also saw significant strength, with Commercial Metals (CMC) helping to lead the sector higher after reporting a third quarter profit compared to a year-ago loss. Oil, wireless, and housing stocks also posted notable gains on the day.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's benchmark Nikkei 225 Index advanced by 1.1 percent, while Hong Kong's Hang Seng Index rose by 1.2 percent.
The major European markets also showed notable moves to the upside on the day. The U.K.'s FTSE 100 Index rose by 1.4 percent, while the French CAC 40 Index and the German DAX Index surged up by 2 percent and 1.9 percent, respectively.
In the bond market, treasuries moved lower on the day, although selling pressure was relatively subdued. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.2 basis points to 2.985 percent.
Looking Ahead
While early trading on Wednesday may be impacted by the outcome of the Greek confidence vote, traders may be reluctant to make any significant moves ahead of the Federal Reserve's afternoon monetary policy announcement and Fed Chairman Ben Bernanke's accompanying press conference.
On the earnings front, Adobe Systems (ADBE) is among the companies due to release their quarterly results after the close of trading, while FedEx (FDX) is due to release its quarterly results before the start of trading on Wednesday.
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