Dow Surges To New Record Closing High On Upbeat Earnings News

(RTTNews) - Extending the upward move seen over the two previous sessions, stocks moved mostly higher during trading on Tuesday. The Dow led the charge, surging to a new record closing high.

The Dow jumped 742.76 points or 1.9 percent to 40,954.48, the S&P 500 climbed 35.98 points or 0.6 percent to a new record closing high of 5,667.20 and the Nasdaq rose 36.77 points or 0.2 percent to 18,509.34.

The strength on Wall Street partly reflected a positive reaction to some of the latest earnings news, with Dow component UnitedHealth (UNH) moving sharply higher after reporting second quarter earnings that exceeded analyst estimates.

Bank of America (BAC) also moved notably higher after the financial giant reported better than expected second quarter earnings.

Shares of Morgan Stanley (MS) also turned positive after seeing initial weakness after the company reported better than expected second quarter earnings.

Traders also reacted positively to the latest U.S. economic news, including a Commerce Department report showing U.S. retail sales came in unchanged in the month of June.

The Commerce Department said retail sales came in flat in June after rising by an upwardly revised 0.3 percent in May.

Economists had expected retail sales to come in unchanged compared to the 0.1 percent uptick originally reported for the previous month.

Excluding a sharp drop in sales by motor vehicle and parts dealers, retail sales climbed by 0.4 percent in June after inching up by 0.1 percent in May. Ex-auto sales were expected to creep up by 0.1 percent.

"Judging by the positive market reaction to the US retail sales data, it appears that investors are focusing on the economic strength for now, while also maintaining a strong belief that monetary policy starts to ease after the summer," said Dan Coatsworth, investment analyst at AJ Bell.

The Labor Department also released a report showing import prices in the U.S. were unexpectedly flat in the month of June.

The report said import prices were unchanged in June after dipping by a revised 0.2 percent in May. Economists had expected import prices to rise by 0.2 percent compared to the 0.4 percent decrease originally reported for the previous month.

Meanwhile, the Labor Department said export prices declined by 0.5 percent in June after falling by a revised 0.7 percent in May.

Export prices were expected to edge down by 0.1 percent compared to the 0.6 percent decrease originally reported for the previous month.

Sector News

Housing stocks showed a substantial move to the upside on the day, with the Philadelphia Housing Sector Index spiking by 5.3 percent to a record closing high.

Optimism about the outlook for interest rates contributed to the strength in the sector despite a report from the National Association of Home Builders showing an unexpected dip in homebuilder confidence in the month of July.

Gold stocks are also saw significant strength amid a sharp increase by the price of the precious metal, driving the NYSE Arca Gold Bugs Index up by 3.4 percent. The index reached a more than two-year closing high.

Considerable strength was also visible among airline stocks, as reflected by the 3.3 percent surge by the NYSE Arca Airline Index.

Banking, biotechnology and telecom stocks also saw notable strength on the day, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index rose by 0.2 percent and China's Shanghai Composite Index inched up by 0.1 percent, while Hong Kong's Hang Seng Index slumped by 1.6 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the French CAC 40 Index slid by 0.7 percent, the German DAX Index fell by 0.4 percent and the U.K.'s FTSE 100 Index dipped by 0.2 percent.

In the bond market, treasuries rebounded following the pullback seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell 6.2 basis points to 4.167 percent.

Looking Ahead

Trading on Wednesday may be impacted by reaction to reports on industrial production and housing starts as well as the Federal Reserve's Beige Book.