Better-than-expected earnings from retailers and an upbeat housing report helped indexes recover some ground Tuesday after previous session’s big market sell-off pushed equities sharply lower. A rise in German investor confidence also helped sentiments on the Street as investors chose to brush aside a greater-than-expected plunge in wholesale prices.
The benchmark S&P 500 index closed up 1% at 989.67. The Dow Jones Industrial Average added 0.9% to 9,217.94 and the Nasdaq Composite index gained 1.3% to 1,955.92. About four stocks advanced for every one that declined. Volume was light with only 991 million shares exchanging hands. With investors back among equities, Treasuries declined, as the 2-year fell 1/32 and its yield rose to 1.028%, and the price of the 10-year eased 12/32 in price and its yield increased to 3.517%. The measure of market volatility, the CBOE Vix, reversed Tuesday’s near-15% jump, retreating 6.1% to 26.18.
With no clear sings of a near-future rebound, and a shaky U.S. consumer continuing to hold dollars, investors appear nervous about the next leg of a rally that many feel has gone too far too fast. This morning’s U.S. stock futures indicate shares are set to fall at the opening. Technology stocks are expected to remain under pressure following last night’s cautious projections from Hewlett-Packard (NYSE:HPQ).
On Tuesday, financial, industrial and technology stocks showed strength. Apple (NASDAQ:AAPL) rose 2.8%. Among financial issues, Bank of America (NYSE:BAC) added 2.1%, while JPMorgan Chase (NYSE:JPM) rose 2.4%. Key stocks yesterday fueled stock market gains. The retail sector got a boost as Target (NYSE:TGT) reported better-than-expected results, helped by cost-cutting measures and lower inventories. Home Depot (NYSE:HD) also beat expectations due to its lowered costs, and also raised its full-year guidance.
A number of shares also benefited from analyst upgrades, including American Express (NYSE:AXP), which was the leading gainer on the DJIA with its 4.3% advance. The firm received a KBW upgrade to “outperform”, citing “improving trends in credit.” Goldman Sachs (NYSE:GS) raised its rating of HSBC (NYSE:HBC) to “buy,” noting its loan loss provisions may decline. Broadpoint AmTech raised Microsoft (NASDAQ:MSFT) to “buy.”
Gains were broad-based with nine of the ten S&P500 industry sectors recording gains. Leading the gainers were basic materials (+1.8%), financials (+1.7%), industrials and technology shares (+1.5%) and oil and gas (+1.0%). Only health care, a defensive sector, eased with a modest, 0.1% drop.
Meanwhile, Warren Buffett warned in a New York Times article that “Enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects.”
Among the corporate results, Deere (NYSE:DE) and BJ Wholesale (NYSE:BJ) have reported their earnings. Limited (NYSE:LTD), Network Appliance (NASDAQ:NTAP), and Petsmart (NASDAQ:PETM) are also scheduled to report.