RTTNews - Stocks finished modestly higher on Tuesday, as the day's positive economic reports and news of Ben Bernanke's reappointment generated some upbeat sentiment on Wall Street. The major averages all finished in positive territory by slim margins, well off their best levels of the day.
Buying interest was largely sparked by the day's economic data, with a report from the Conference Board showing that consumer confidence rebounded significantly in the month of August after seeing some deterioration in July.
The consumer confidence index jumped to 54.1 in August from an upwardly revised 47.4 in July. Economists had been expecting the index to increase to 47.9 from the 46.6 originally reported for the previous month.
Separately, Standard and Poor's revealed that the S&P/Case-Shiller 20-City Composite Home Price Index fell at an annual rate of 15.4 percent in June compared to a revised 17 percent drop in May. Economists had expected prices to fall 16.4 percent compared to the same month a year ago.
In other news, President Barack Obama officially nominated Ben Bernanke for a second term as Federal Reserve Chairman this morning, with the president praising the manner in which the Fed Chief handled the recent financial crisis.
Meanwhile, both the White House and the Congressional Budget Office released new projections of near-record budget deficits totaling roughly $1.58 trillion for 2009.
That level of deficit, a combination of increased government spending and plummeting tax revenues due to the recession, will ring in at 11.2 percent of the country's gross domestic product, the highest deficit since World War II, according to both analyses.
The major averages saw choppy movement in late session trading, holding onto modest gains. The Dow closed up 30.01 points or 0.3 percent at 9,539.29, the Nasdaq closed up 6.25 points or 0.3 percent at 2,024.23 and the S&P 500 closed up 2.43 points or 0.2 percent at 1,028.00.
Airline stocks saw significant strength on the day, with the NYSE Arca Airline Index advancing by 4 percent on the session. With the gain, the index ended the day at its best closing level in seven and a half months.
Biotechnology stocks also saw notable gains, with the NYSE Arca Biotechnology Index rising by 2.8 percent for the day. The biotechnology index added to its recent gains and set a new historic closing high.
Housing stocks also moved considerably higher, as reflected by the 2.2 percent gain posted by the Philadelphia Housing Sector Index. The day's climb propelled the index to its best closing level in nearly eleven months on the heels of today's housing data.
The index was boosted by shares of Hovnanian Enterprises Inc. (HOV), which jumped by 6.5 percent and finished the session at a ten month closing high.
While, brokerage, commercial real estate, electronic storage and gold stocks also rose by considerable margins, significant weakness was visible among oil service and natural gas stocks. The losses by oil service stocks came as crude for October delivery fell $2.32 to $72.05 a barrel.
The Philadelphia Oil Service Sector slipped by 2.2 percent, pulling back off of a two and a half month closing high, while the NYSE Arca Natural Gas Index fell by 1.7 percent, dropping from a ten and a half month closing high.
Shares of Boeing (BA) led the way higher in the Dow, posting a gain of 2.4 percent. With the advance, the stock extended its winning streak for a fourth straight session, advancing to a two-month closing high.
Banking stalwart Bank of America (BAC) saw a comparable gain, rising by 2.3 percent. The climb helped the stock to finish at its best closing level in nearly nine months.
Merck (MRK) and JP Morgan Chase (JPM) rose by 1.4 percent and 1.3 percent, respectively. Merck closed at its best price in eleven and a half months, while JP Morgan finished at a ten and a half month closing high.
Intel (INTC) and Home Depot (HD) also helped to boost the blue chip index, while Exxon Mobil (XOM) limited the day's gain, sliding by 0.9 percent. Alcoa (AA) and Coca-Cola (KO) also fell, although by more modest margins.
In overseas trading, stock markets across the Asia-Pacific region closed mostly lower on Tuesday. Japan's benchmark Nikkei 225 Index slid by 0.8 percent, while Hong Kong's Hang Seng Index fell by 0.5 percent.
Meanwhile, the major European markets ended the day moderately higher, with the German DAX Index and the French CAC 40 Index closing up 0.8 percent and 0.6 percent, respectively, while the U.K.'s FTSE 100 Index climbed 0.4 percent.
In the bond markets, the benchmark ten-year note lingered near the unchanged mark for the majority of the session before moving into positive territory following the release of respectable results of a two-year note auction. Subsequently, the yield on the note, which moves opposite of its price, finished at 3.450 percent, posting a loss of 4.4 basis points.
Wednesday, the focus of the markets will likely turn to data on durable goods orders from the Commerce Department at 8:30 a.m. ET. Economists expect a 3.2 percent increase in durable goods orders for July after a 2.5 percent decline in June.
Separately, the Commerce Department will release data on new home sales in July at 10 a.m. ET, with economists forecasting the annual rate to rise to 390,000. June's data surprised economists, with sales jumping 11 percent to a rate of 384,000 units.
Further, Atlanta Federal Reserve Bank President Dennis Lockhart is due to deliver a luncheon address to the Chattanooga Area Chamber of Commerce in Chattanooga, Tennessee at 11 a.m. ET, which may also draw the attention of traders.
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