U.S. stocks rose on Tuesday, erasing some of the sharp losses in the previous session as better-than-expected results from big retailers encouraged investors' back into the market.
Results at consumer giants Home Depot Inc
The results from retailers offset a surprise drop in housing starts and permits in July, sending the broader S&P 500 index and the tech-heavy Nasdaq up more than 1 percent.
The Dow Jones industrial average <.DJI> was up 90.01 points, or 0.99 percent, at 9,225.35. The Standard & Poor's 500 Index <.SPX> was up 10.56 points, or 1.08 percent, at 990.29. The Nasdaq Composite Index <.IXIC> was up 25.72 points, or 1.33 percent, at 1,956.56.
On Monday, the S&P 500, which is up nearly 50 percent since its early March low, faced its steepest decline in seven weeks, a drop some analysts were quick to call the start of a market correction.
Some bounce back was expected after a decent pullback yesterday. The market took (earnings) reports as being better than they actual were, because it wants to go up, said Steve Goldman, market strategist at Weeden & Co in Greenwich, Connecticut.
People also shrugged off the data for same reason. The market clearly has an upside bias.
Financial, retail and technology stocks were the top advancers Tuesday, but gains were broad-based. The Nasdaq outpaced the other indexes after RBC highlighted investment opportunities in the smartphone market and raised its price target on shares of Apple Inc
Mohamed El-Erian, the chief executive of bond fund manager Pacific Investment Management Co, told Reuters Television on Tuesday that the rally in U.S. stock markets has topped out, as valuations are running ahead of fundamentals.
Tuesday's results from retailers were in sharp contrast to those of Lowe's Cos
Home Depot shares rose 3.3 percent to $26.97, Target climbed 7.5 percent to $44.3 and Saks added 6.7 percent to $5.71. The S&P retail gained <.RLX> was up 1.7 percent.
Another key earnings report will come after the market closes. Investors will watch Hewlett-Packard Co
Following the RBC comments, Apple's shares climbed 2.3 percent to $163.26, RIM added 4.2 percent to $73.68 and Palm climbed 4 percent to $13.76.
(Reporting by Angela Moon; Editing by Padraic Cassidy)