Stocks rose by significant margins on Tuesday, with diminishing concerns over the Dubai financial crisis and a silver lining in the day's mixed economic data fueling the day's rally. The major averages all finished in positive territory, with the Dow finishing at a fresh yearly high.
The strength in the markets was partly due to comments from Dubai World, which said it has initiated restructuring talks with major banks. Stocks managed to hold onto their gains following the release of a mixed of a batch of economic data not long after the start of trading.
On the economic front, the Institute for Supply Management released a report showing that its headline index of activity in the manufacturing sector fell to 53.6 in November from 55.7 in October, although a reading above 50 still indicates growth in the sector. Economists had been expecting a more modest decrease to a reading of 55.0.
Separately, the National Association of Realtors said that its pending home sales index rose 3.7 percent to 114.1 in October from 110.0 in September, reaching its highest level since March of 2006. The continued increase came as a surprise to economists, who had expected pending home sales to edge down by 1.0 percent.
Meanwhile, the U.S. Commerce Department reported that construction spending was flat in October following a revised a 1.6 percent decline in September, a sharp downward revision from the originally reported increase of 0.8 percent.
This afternoon, Philadelphia Federal Reserve Bank President Charles Plosser called for the Fed to raise interest rates, becoming the first central bank official to call for a rate hike. Speaking at a seminar in Rochester, New York, Plosser said that unless the Fed acts soon, "the inflation rate is likely to rise to levels that most would consider unacceptable"
The Philly Fed chief also issued his latest economic outlook, forecasting U.S. economic growth at an approximate 3 percent annual rate in the coming two years.
On the corporate front, General Electric (GE) announced that it has entered into an agreement with Vivendi SA whereby GE will acquire the 20 percent stake in NBC Universal held by Vivendi for $5.8 billion. The successful completion of the deal with Vivendi will pave the way for GE to sell the controlling interest in NBC Universal to Comcast (CMCSA).
Major automakers reported mixed U.S. sales for the month of November, with sales at Toyota Motor Corp. (TM) and Daimler AG (DAI) rising by 2.6 percent and 9.1 percent, respectively. Meanwhile, Ford Motor Co. (F) said sales remained flat with last year and General Motors posted a 2.2 percent drop in sales for the month.
The major averages all saw choppy movement in late session dealing, closing off of their best levels of the day. The Dow gained 126.74 points or 1.2 percent to close at 10,471.58, the Nasdaq rose by 31.21 points or 1.5 percent to 2,175.81 and the S&P 500 advanced by 13.23 points or 1.2 percent to 1,108.86.
Sector News
Gold stocks turned in some of the day's best performances, with the NYSE Arca Gold Bugs Index posting a gain of 5.5 percent. The index closed at its best level in over twenty months following another rally in the price of gold, which set another all-time closing high.
Health insurance stocks also saw substantial gains, with the Morgan Stanley Health Insurance Index rising by 2.7 percent on the day. The climb propelled the index to its best closing level in over a year.
WellCare Health Plans (WCG) was one of the best performers in the sector, posting a gain of 5.4 percent. The stock ended the day at its highest closing price in fourteen months.
Steel, airline, housing, utility, software, defense and commercial real estate stocks also advanced by considerable margins on the day, reflecting strength in a broad variety of equity segments.
Dow Components
Pfizer (PFE) was the Dow's leading percentage gainer, climbing by 3.7 percent. With the upward move, the stock ended the session at its best closing level in over a year.
Home Depot (HD) also rose by a notable margin, recording a gain of 3.2 percent. With the advance, the stock closed at its best price in two and a half months.
Shares of communications giant Verizon (VZ) also saw buying interest, advancing by 2.8 percent. The stock was able to finish the day at an eight-month closing high.
Boeing (BA), Intel (INTC), Alcoa (AA) and Cisco (CSCO) also rose, among others while financial blue chips JP Morgan Chase (JPM) and American Express (AXP) closed lower along with food giant Kraft (KFT).
Other Markets
In overseas trading, stocks markets across the Asia-Pacific region ended notably higher on Tuesday. Japan's benchmark Nikkei 225 Index advanced 2.4 percent, while Hong Kong's Hang Seng Index rose by 1.3 percent.
The major European markets also saw substantial gains. The U.K.'s FTSE 100 Index gained 2.3 percent, while the French CAC 40 Index and the German DAX Index rose by 2.6 percent and 2.7 percent, respectively.
In the bond markets, treasuries ended the day notably weaker. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, closed at 3.275 percent, posting a gain of 7.4 basis points.
Looking Ahead
Wednesday, traders may focus on a private employment report from payroll processor ADP, looking for hints of what to expect from Friday's monthly jobs report from the Labor Department. The Fed's economic comments in the latest Beige Book report may also garner some attention.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.