Upbeat U.S. Economic Data Contributes To Rally On Wall Street

(RTTNews) - Stocks moved sharply higher over the course of the trading day on Tuesday, regaining ground following recent weakness. The major averages all moved to the upside on the day, with the Dow snapping a six-session losing streak.

The major averages pulled back off their best levels going into the close but held on to strong gains. The Nasdaq surged 219.89 points or 1.7 percent to 13,555.67, the S&P 500 jumped 49.59 points or 1.2 percent to 4,378.41 and the Dow climbed 212.03 points or 0.6 percent to 33,926.74.

The rally on Wall Street partly reflected optimism the U.S. economy will avoid a recession following the release of several upbeat reports.

The Commerce Department released a report showing an unexpected surge in new orders for U.S. manufactured durable goods in the month of May.

The report said durable goods orders shot up by 1.7 percent in May after jumping by an upwardly revised 1.2 percent in April.

Economists had expected durable goods orders to slump by 1.0 percent compared to the 1.1 percent advance that had been reported for the previous month.

Excluding a surge in orders for transportation equipment, durable goods orders climbed by 0.6 percent in May after falling by a revised 0.6 percent in April.

Ex-transportation orders were expected to edge down by 0.1 percent compared to the 0.2 percent dip that had been reported for the previous month.

A separate Commerce Department unexpectedly showed a sharp increase in new home sales in the U.S. in the month of May.

The report said new home sales soared 12.2 percent to an annual rate of 763,000 in May after surging 3.5 percent to a revised rate of 680,000 in April.

Economists had expected new home sales to slump 1.2 percent to an annual rate of 675,000 from the 683,000 originally reported for the previous month.

With the unexpected spike, new home sales reached their highest level since hitting a rate of 773,000 in February 2022.

Another report released by the Conference Board showed a significant improvement in U.S. consumer confidence in the month of June.

The Conference Board said its consumer confidence index jumped to 109.7 in June from a revised 102.5 in May. Economists had expected the index to rise to 103.7 from the 102.3 originally reported for the previous month.

Later in the week, the Commerce Department is due to release its report on personal income and spending in the month of May, which includes a reading on inflation said to be preferred by the Federal Reserve.

The consumer price inflation data could significantly impact opinions regarding whether the Fed will follow through on its forecast interest rate hikes.

Sector News

Airline stocks moved sharply on the day, with the NYSE Arca Airline Index soaring by 4.5 percent to its best closing level in over a year.

Delta Air Lines (DAL) posted a standout gain after raising its second quarter earnings guidance and forecasting full-year earnings at the high end of its prior forecast.

Substantial strength was also visible among semiconductor stocks, as reflected by the 3.6 surge by the Philadelphia Semiconductor Index.

The upbeat new home sales also contributed to significant strength among housing stocks, driving the Philadelphia Housing Sector Index up by 3.0 percent. The index reached a record closing high.

Networking, software and computer hardware also saw considerable strength, while gold stocks bucked the uptrend amid a decrease by the price of the precious metal.

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 fell by 0.5 percent, while China's Shanghai Composite Index jumped by 1.2 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the French CAC 40 Index rose by 0.4 percent, the German DAX Index inched up by 0.2 percent and the U.K.'s FTSE 100 Index crept up by 0.1 percent.

In the bond market, treasuries came under pressure following the release of the upbeat U.S. economic data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.9 basis points to 3.768 percent.

Looking Ahead

Trading on Wednesday may be impacted by reaction to remarks by Fed Chair Jerome Powell, who is due to participate in a panel discussion at the European Central Bank Forum on Central Banking 2023 in Sintra, Portugal.