Positive Catalysts Lead To Strength On Wall Street - U.S. Commentary

(RTTNews) - Stocks moved mostly higher over the course of the trading day on Tuesday, as traders reacted to a number of positive catalysts. The gains on the day partly offset the weakness seen in the previous session, with the Dow reaching a new record closing high.

The major averages all ended the day firmly in positive territory. The Dow climbed 102.75 points or 0.6 percent to 17,879.55, the Nasdaq rose 28.46 points or 0.6 percent to 4,755.81 and the S&P 500 advanced 13.11 points or 0.6 percent to 2,066.55.

The strength on Wall Street partly reflected speculation about further stimulus from China, which offset some of the concerns about developments overseas that contributed to yesterday's weakness.

Reports have suggested that the People's Bank of China may follow up last month's surprise interest rate cut with a reduction in banks' reserve requirements.

Positive sentiment was also generated by news on the merger-and-acquisition front, which is typically announced on Monday.

Chip makers Spansion (CODE) and Cypress Semiconductor (CY) posted standout gains on the day after announcing a $4 billion all-stock merger.

Shares of Avanir Pharmaceuticals (AVNR) also moved sharply higher after the biopharmaceutical company agreed to be acquired by Japan's Otsuka Pharmaceutical for $17 per share in cash or about $3.5 billion.

Auto giants Ford (F) and General Motors (GM) also turned in strong performances after reporting better than expected November sales.

On the U.S. economic front, the Commerce Department released a report showing a much stronger than expected jump in construction spending in the month of October.

The report said construction spending surged up 1.1 percent to an annual rate of $971.0 billion in October from the revised September estimate of $960.3 billion. Economists had expected spending to increase by about 0.5 percent.

Sector News

After falling sharply in the two previous sessions, railroad stocks showed a strong move back to the upside. The Dow Jones Railroads Index soared by 3.5 percent after ending Monday's trading at its worst closing level in over a month.

Greenbrier (GBX) helped to lead the railroad sector higher, with the freight car equipment maker jumping by 8.3 percent.

Oil stocks also turned in a strong performance on the day, driving the NYSE Arca Oil & Gas Index up by 1.9 percent. The index continued to recover from last Friday's sell-off despite a decrease by the price of crude oil.

Brokerage, tobacco, banking and electronic storage stocks also saw significant strength, moving higher along with most of the other major sectors.

On the other hand, gold stocks moved sharply lower on the day, dragging the NYSE Arca Gold Bugs Index down by 3.2 percent. The weakness in the sector came as gold for February delivery tumbled $18.70 to $1,199.40 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 rose by 0.4 percent, while Hong Kong's Hang Seng Index jumped by 1.2 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index dipped by 0.3 percent, the U.K.'s FTSE 100 Index surged up by 1.3 percent and the French CAC 40 Index edged up by 0.3 percent.

In the bond market, treasuries saw significant weakness, pulling back further off their recent highs. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 6.7 basis points to 2.285 percent.

Looking Ahead

Economic data is likely to be in focus in Wednesday, as traders will be presented with reports on private sector employment, labor productivity and costs, and service sector activity.