Stocks Close Sharply Higher Amid Another Jump In Oil Prices - U.S. Commentary

(RTTNews) - With the price of crude oil once again setting the course for the markets, stocks moved sharply higher over the course of the trading day on Tuesday. The gains on the day further offset the weakness that was seen last week.

The major averages closed at their best levels of the day for the second consecutive session. The Dow soared 305.36 points or 1.8 percent to 17,666.40, the Nasdaq jumped 51.05 points or 1.1 percent to 4,727.74 and the S&P 500 surged up 29.18 points or 1.4 percent to 2,050.03.

Extending the rally seen late in the previous session, stocks moved to the upside along with the price of crude oil, which spiked higher for the third consecutive session.

Crude oil for March delivery jumped $3.48 to $53.05 a barrel after surging up $1.33 a barrel on Monday and soaring $3.71 a barrel last Friday.

The continued increase by the price of crude came as BP (BP) joined other major energy companies in announcing a reduction in its capital spending plans.

With the spending cuts expected to help reduce the global supply glut, some investors suggested that crude oil has found its bottom.

Positive sentiment may also have been generated by developments in Greece, where the new government reportedly dropped calls for a write-down of its foreign debt.

Among individual stocks, shares of Staples (SPLS) and Office Depot (ODP) moved sharply higher after the Wall Street Journal reported that the office supplies retailers are in advanced merger talks.

Advent Software (ADVS) also turned in a strong performance after agreeing to be acquired by SS&C Technologies for approximately $2.7 billion in cash.

On the other hand, shares of Rent-A-Center (RCII) came under pressure after the equipment rental company reported weaker than expected fourth quarter earnings and provided disappointing guidance.

Sector News

Extending the upward move seen over the past few sessions, energy stocks moved sharply higher on the day amid the continued increase by the price of crude oil.

Oil service stocks posted particularly strong gains within the energy sector, driving the Philadelphia Oil Service Index up by 4.1 percent. With the gain, the index continued to recover from the four-year closing low it set last Thursday.

Reflecting the strength in the energy sector, the NYSE Arca Oil & Gas Index and the NYSE Arca Natural Gas Index also jumped by 3.3 percent and 2.8 percent, respectively.

Significant strength was also visible among steel stocks, as reflected by the 4.5 percent gain posted by the NYSE Arca Steel Index. AK Steel (AKS), Olympic Steel (ZEUS) and Universal Stainless (USAP) posted standout gains on the day.

Brokerage, railroad, telecom and chemical stocks also moved notably higher over the course of the session, while gold and biotech stocks bucked the uptrend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Tuesday. Japan's Nikkei 225 Index tumbled by 1.3 percent, while China's Shanghai Composite Index surged up by 2.5 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the German DAX Index rose by 0.6 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index jumped by 1.1 percent and 1.3 percent, respectively.

In the bond market, treasuries pulled back sharply amid optimism about the latest developments in Greece. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, surged up 10.7 basis points to 1.78 percent.

Looking Ahead

Economic data may be back in the spotlight on Wednesday, with traders likely to keep an eye on reports on private sector employment and service sector activity.

Disney (DIS), General Motors (GM), Merck (MRK), and Whirlpool (WHR) may also be in focus after reporting their quarterly results.