Stocks are holding on to substantial gains in mid-afternoon trading on Tuesday, with the strongest U.S. manufacturing activity number since 2004 contributing to the rally and helping to eclipse uncertainty arising from continued civil unrest in Egypt.
The major averages have moved roughly sideways since hitting their highs for the session in the early afternoon. The Dow is currently up 136.42 points or 1.2 percent at 12,028.35, the Nasdaq is up 51.94 points or 1.9 percent at 2,752.02 and the S&P 500 is up 20.32 points or 1.6 percent at 1,306.44.
Economic data was a key catalyst for today's rally, with the Institute for Supply Management reporting that its index of activity in the manufacturing sector rose to 60.8 in January from a revised 58.5 in December, with a reading above 50 indicating growth in the sector.
With the notable increase in January, the manufacturing index reached its highest level since coming in at 61.4 in May of 2004. The January reading also pointed to the eighteenth consecutive month of expansion in the sector.
Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "The headline index is now at a level consistent with GDP growth of roughly 5 percent annualized."
"This is obviously very encouraging, but actual growth is likely to come in weaker than that since other sectors are not faring half as well in this recovery as manufacturing appears to be," he added.
Meanwhile, the Commerce Department reported that construction spending fell 2.5 percent to $787.9 billion in December from the revised November estimate of $807.8 billion. The steep drop came as a surprise to economists, who had expected spending to edge up by 0.2 percent.
In earnings news, United Parcel Service (UPS) posted adjusted fourth-quarter net income of $1.08 per share, exceeding expectations for $1.05 per share. Total revenue came in at $13.42 billion, edging past estimates for $13.40 billion.
The company's full year 2011 earnings guidance also exceeded current Wall Street estimates. UPS has gained 4.4 percent on the news.
Dow Components
Nearly all of the thirty Dow components are on the upside in mid-afternoon trading, helping the blue chip index to hold on to a triple-digit gain.
Pfizer (PFE) is leading the way higher with a gain of 5.1 percent. The advance has the stock on pace for a one-year closing high.
The move comes after the firm posted adjusted fourth-quarter income of $0.47 per share, down year-over-year but above analyst estimates for $0.46 per share. Revenues for the quarter totaled $17.56 billion, topping expectations for $16.97 billion for the quarter.
Pfizer forecast full year 2011 adjusted earnings of $2.16 to $2.26 per share on revenues of $66 billion to $68 billion. Analysts had expected earnings of $2.30 per share on revenues of $66.8 billion.
Aluminum producer Alcoa (AA) is also notably higher, up by 4.2 percent. Shares are also on pace to set their best closing price in a year's time.
Bank of America (BAC), Exxon Mobil (XOM), General Electric (GE) and Disney (DIS) are also advancing by substantial margins, further boosting the Dow on the day.
JP Morgan Chase (JPM), Hewlett Packard (HPQ), Verizon (VZ) and DuPont (DD) are also up by at least 1 percent each.
On the downside, McDonald's (MCD) and Procter & Gamble (PG) are the only Dow components in the red, with both stocks down by 0.2 percent.
Sector News
Technology stocks are leading the rally today, with computer hardware and semiconductor stocks posting particularly strong gains.
Within the hardware sector, Lexmark (LXK) is sharply higher after its fourth quarter earnings and revenues topped estimates and the firm offered satisfactory first quarter guidance. Lexmark is currently up by 11.5 percent after reaching its best intraday level in over two months.
Imation (IMN) is also turning in a strong performance after reporting its fourth quarter results and unveiling its corporate strategy. The stock is up by 11.2 percent and on pace to end the session at its highest closing price in nine months.
Banking, health insurance, housing and pharmaceutical stocks round out some of the strongest sector gainers in today's rally.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region saw modest gains on Tuesday. Japan's benchmark Nikkei 225 Index rose by 0.4 percent, while Hong Kong's Hang Seng Index gained 0.2 percent.
Meanwhile, the major European markets saw more notable gains. The U.K.'s FTSE 100 Index and the French CAC 40 Index rose by 1.6 percent and 1.7 percent, respectively, while the German DAX Index advanced by 1.5 percent.
In the bond markets, treasuries are notably lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is trading at 3.422 percent, up by 4.4 basis points.
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May 15, 2026 15:25 ET Apart from the confirmation of Kevin Warsh as the next Fed chair, the main news on the economics front this week included key price data from the U.S. and the first quarter economic growth figures from major economies. Both consumer prices and producer costs have started to reflect the effect of supply shocks due to the Middle East conflict. In Europe, GDP data was in focus, while inflation data from China dominated the news flow in Asia.