U.S. stocks rose for a third day on Tuesday as a pair of economic reports and an upbeat profit projection from Jabil Circuit kept investors on the buying table. All major stock indexes ended at their year highs while the S&P 500 index ended just shy of a 15-month high.
Stocks had recorded significant gains on Monday as a number of corporate deal announcements and analyst upgrades returned to boost confidence on the Street.
On Tuesday, the S&P 500 added 0.4% to 1,118.03. The Dow Jones Industrial Average gained 50.79 points, 0.5%, to 10,464.93. The tech-heavy NASDAQ climbed 0.7% to 2,253. The VIX volatility measure, the market’s fear gauge, slid 4.6% to 19.55, closing below 20 for the first time since August 2008. Trading volume on the NYSE fell to 0.956 billion as traders went on holiday breaks.
What encouraged investors the most was an existing home sales report which showed November existing home sales surged 7.4% to a 6.54 annual pace, helped by government stimulus efforts. Housing company shares were quick to take the lead, with KB Home (NYSE:KBH) jumping 6.9%; Pulte Homes (NYSE:PHM) rising 4.7%; and Lennar (NYSE:LEN) climbing 3.2%.
The greenback, meanwhile, continued its advance Tuesday against a basket of currencies, edging up 0.3% to 78.28, as a brighter economic picture increased the odds that the Fed would begin raising the Fed funds rate sooner than expected. And a higher dollar sent gold prices lower, off $9.30, to $1,087, its lowest in seven weeks. Yields on US Treasuries remained near four-month highs, as the price on the 10-year note dropped 20/32 and its yield rose to 3.758%.
Crude prices gained 68 cents to $74.40 Tuesday on the improved prospects for demand recovery in the US. Yesterday’s industry-sponsored inventory post, the API, showed inventories declined across the major categories; however, analysts expect this morning’s EIA report to show drawdowns in crude and distillates, but gasoline inventories are expected to show further gains.
