RTTNews - After seeing choppy trading for most of the session, stocks were able to end Tuesday's trading mostly higher. The major averages all finished the day in positive territory, extending their winning streak for a fourth straight session.
Earlier in the session, traders reacted positively to the release of a report from the National Association of Realtors showing that pending home sales increased by much more than expected in the month of April. The increase came as homebuyers responded to very favorable market conditions.
The report showed that the pending home sales index rose 6.7 percent to 90.3 in April from a reading of 84.6 in March. Economists had been expecting a much more modest increase by the index of about 0.5 percent.
Lawrence Yun, NAR chief economist, said, Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market.
In corporate news, General Motors revealed this morning that it has entered into a memorandum of understanding, or MoU, with a buyer for its premium off-road brand Hummer. The deal would save around 3,000 jobs in the U.S.
Separately, GM said it delivered a total of 191,875 vehicles in May, down 29.6 percent from 272,363 vehicles last year. GM total truck sales were down 22 percent last year, while car sales were down 38 percent compared to a year-ago. The company delivered a total of 1,739 hybrid vehicles in May.
Ford (F) said that its May U.S. sales fell 24.2 percent from a year ago, as vehicle demand continued to shrink in a challenging economic and competitive environment. However, the automaker's May sales were up 20 percent from the previous month, marking the highest sales for any month since July 2008.
Meanwhile, financial services provider JP Morgan Chase (JPM) said Monday that it plans to raise around $5 billion in common equity as part of its effort to repay $25 billion of the capital it received from the federal bailout fund.
American Express (AXP) also revealed that it has commenced a public offering of $500 million of its common stock. Part of the funding is expected to go to a repurchase of $3.4 billion of preferred shares issued to the U.S. Treasury as part of the Capital Purchase Program.
In other news, shares of DeVry (DV) moved higher after Standard & Poor's announced that the education company would replace General Motors in the S&P 500. Devry finished the day posting a 5 percent gain.
The major averages ended the day modestly higher, although well off their best levels of the day. The Dow finished up by 19.43 points or 0.2 percent at 8,740.87, the Nasdaq closed up 8.12 points or 0.4 percent, at 1,836.80 and the S&P 500 finished up by 1.87 points or 0.2 percent at 944.74.
Despite the lackluster performance by the broader markets, retail stocks posted notable gains, with the S&P Retail Index finishing 1.5 percent higher on the day. The day's gain helped the index reach its best closing level in eight months.
Airline stocks also saw considerable gains on the day, as reflected by the 5.5 percent advance shown by the Amex Airline Index. With the advance, the index moved further off the nearly two-month closing low that it set last week, rising to its best level in three weeks.
Biotechnology, housing, gold and chemical stocks also showed significant strength on the day. Gold stocks were helped by an increase in the price of the precious metal, with gold for August delivery closing up $4.40 at $984.40 an ounce
Meanwhile, semiconductor stocks saw significant weakness, dragging the Philadelphia Semiconductor Index down 3.3 percent. With the decline, the index pulled back well off the nearly eight-month closing high it set on Monday.
Banking stocks also came under considerable pressure after several financial giants announced capital raising plans, with the S&P Banks Index closing down 3 percent. Some real estate, computer hardware, and utility stocks also posted notable losses.
Most of the Dow components closed higher, helping the blue chip index to hold onto its modest gain on the day.
Shares of Boeing (BA) helped to bolster the Dow, rising by 3.1 percent on the session. With the advance, the stock closed at its best level in just under seven months.
Aluminum giant Alcoa (AA) also showed a strong upward move on the day, ending the session up 7.0 percent. Bank of America (BAC) and Exxon Mobil (XOM) also helped the Dow to finish above the unchanged mark, rising by 1.8 percent and 1.6 percent, respectively
Meanwhile, American Express and JP Morgan came under pressure amid concerns about share dilution, closing down 4.9 percent and 4.5 percent, respectively. The losses came after the companies revealed broad equity offerings as a means to raise capital.
Citigroup (C) also showed a significant decline, falling by 4.9 percent. Intel (INTC), IBM (IBM), and Wal-Mart (WMT) also posted notable losses.
In overseas trading, stock markets across the Asia-Pacific region finished mixed. Japan's benchmark Nikkei 225 Index edged up by 0.3 percent, while Hong Kong's Hang Seng fell 2.6 percent.
The major European markets also turned in a mixed performance. The French CAC 40 Index slipped by less than a tenth of a percent, while the German DAX Index rose by a minute margin. The U.K.'s FTSE 100 Index dropped by 0.7 percent.
In the bond markets, treasuries were able to post strong gains despite some volatility seen over the course of the day. Subsequently, the yield on the benchmark ten-year note closed at 3.644 percent, a drop of 7.1 basis points on the day.
Trading on Wednesday is likely to be impacted by private payroll processor ADP's employment data, the Institute for Supply Management's report on activity in the service sector and factory orders data from the Commerce Department, all covering the month of May.
Bond market players will also look to another quantitative easing move from the Federal Reserve Wednesday morning. The New York arm of the Fed will purchase treasuries set to mature between May of 2016 and May of 2019. The buyback is set to begin at 10:15 a.m. ET.
Traders will also look to testimony from Federal Reserve Chief Ben Bernanke, who is scheduled to testify before the House Budget Committee in Washington on the current economic climate. The testimony is set to begin at 10:00 a.m. ET.
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