The stock market rebounded on Tuesday as an upbeat report on home prices combined with increasing consumer confidence and strong earnings reports.
A jump in The Conference Board’s Consumer Confidence Index for January to 80.7 from December’s 77.5 combined with an upbeat report on home prices as well as positive earnings reports to send the stock market higher on Tuesday. The 20-City Composite for the S&P/Case-Shiller Home Price Index climbed 13.7 percent on a year-over-year basis, consistent with economists’ expectations. A crucial earnings beat by AK Steel (AKS) sent the stock soaring 18.70 percent to $7.11. American Airlines (AAL) also beat earnings expectations and flew 5.90 percent higher to $30.96.
Disappointing news from Apple (AAPL) sent the stock falling 7.99 percent to $506.50 while dragging the Nasdaq down with it. Apple reported that it sold only 51 million iPhones during the last quarter, falling 3.7 million short of analysts’ expectations. The company also gave downbeat revenue guidance for the current quarter.
The Dow Jones Industrial Average (DIA) picked up 90 points to finish Tuesday’s trading session at 15,928 for a 0.57 percent advance. The S&P 500 (SPY) climbed 0.61 percent to close at 1,792.
The Nasdaq 100 (QQQ) dipped 0.09 percent to finish at 3,505. The Russell 2000 (IWM) surged 0.93 percent to end the day at 1,138.
In other major markets, oil (USO) jumped 1.34 percent to close at $34.69.
On London’s ICE Futures Europe Exchange, March futures for Brent crude oil advanced 84 cents (0.79 percent) to $106.87/bbl. (BNO).
February gold futures declined $8.90 (0.70 percent) to $1,254.50 per ounce (GLD).
The transportation sector was back in the express lane on Tuesday, as the Dow Jones Transportation Average rebounded 1.09 percent to 7,277, getting back above its 50-day moving average of 7,270 (IYT).
In Japan, the exchange rate for the yen continued to be the dominant factor in stock market activity. Japanese stocks faded as the yen strengthened to 102.64 per dollar during the last hour of Tuesday’s trading session in Tokyo. A stronger yen causes Japanese exports to be less competitively priced in foreign markets (FXY). The Nikkei 225 Stock Average declined 0.17 percent to 14,980 (EWJ).
In China, all the anxiety about how IPOs would disrupt stock market activity seemed ill-founded, as the IPO of Shaanxi Coal sent the stock soaring beyond 25 percent, triggering a suspension in trading of that stock. The enthusiasm gave the Shanghai Composite Index a 0.26 percent lift to 2,038 (FXI). Hong Kong’s Hang Seng Index dipped 0.07 percent to 21,960 (EWH).
In Europe, a rebound in the banking sector and an upgrade on the region’s metals and mining sector to “neutral” by Nomura gave the stock market a needed boost. The Euro STOXX 50 Index climbed 0.80 percent to 3,038 – while remaining below its 50-day moving average of 3,058. Its Relative Strength Index is 42.14 (FEZ).
Technical indicators revealed that the S&P 500 remained below its 50-day moving average of 1,813 after advancing 0.61 percent to finish Tuesday’s trading session at 1,792. Its Relative Strength Index (RSI) rose from 34.54 to 39.59. The MACD is taking a steep dive below the signal line, which would suggest that the S&P could resume its decline during the immediate future.
On Tuesday, all sectors advanced except for the technology sector, which declined 0.60 percent, thanks to Apple.
Consumer Discretionary (XLY): +0.70%
Technology: (XLK): -0.60%
Industrials (XLI): +0.94%
Materials: (XLB): +0.57%
Energy (XLE): +0.76%
Financials: (XLF): +1.33%
Utilities (XLU): +0.37%
Health Care: (XLV): +1.34%
Consumer Staples (XLP): +0.77%
Bottom line: A positive report on home prices and a surge in the Consumer Confidence Index combined with better-than-expected earnings reports to send the stock market back into positive territory at Tuesday’s closing bell.
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