RTTNews - Following a lackluster start to Tuesday's session, stocks surged higher in mid-morning trading and are seeing continued strength in the early afternoon. The major averages are all firmly in positive territory, adding to the modest gains posted last week.
The day's upward move was sparked by the Conference Board's report on consumer confidence for May, which showed that the group's reading on consumer confidence jumped much more than expected to its highest level since September.
The consumer confidence data alleviated some concern regarding the health of the consumer, whose spending accounts for nearly two-thirds of economic activity.
Retailers have especially benefited from the news, with shares of Best Buy (BBY) and Polo Ralph Lauren (RL) showing notable gains on the day.
Earlier, traders were presented with some disappointing housing price data for March, which prompted a lower open in equities.
The major averages have seen some further upside in recent trading, rising to new highs for the session. The Dow is currently up 180.08 at 8,457.40, the Nasdaq is up 52.44 at 1,744.45 and the S&P 500 is up 19.89 at 906.89.
Most of the major sectors are showing considerable strength in afternoon trading, contributing to the notable gains by the major averages.
Computer hardware stocks are posting significant gains, with the Amex Computer Hardware Index currently up 3.6 percent. Specifically, shares of NetApp (NTAP) are extending their recent upward move, surging up by 6.2 percent to reach their highest level since late September.
The move comes after NetApp was upgraded to hold from sell by Collins Stewart, which cited a pick up in the firm's near-term prospects provided they successfully integrate their acquisition of Data Domain (DDUP).
Commercial real estate stocks are also continuing to advance on the day, with the Morgan Stanley Real Estate Index climbing by 6.1 percent.
Further, semiconductor stocks are also turning in some of the day's best performances, as reflected by the 3.1 percent gain being shown by the Philadelphia Semiconductor index. With the climb, the index has moved to a three week high.
While transportation, housing, and banking stocks also continue to post standout gains, gold stocks continue to see some weakness after moving sharply higher last week. The Amex Gold Bugs Index is currently down 1.4 percent.
Stocks in the News
United Therapeutics (UTHR) is seeing notable upside after the firm announced that the FDA has approved Adcirca (tadalafil) tablets for oral administration. Adcirca is a prescription medicine used to treat PAH, a life-threatening disease that constricts the flow of blood through the pulmonary vasculature.
Shares of the United Therapeutics are up by 11.4 percent, rising to their best level of the year and their highest level since late November.
Additionally, Goodyear Tire & Rubber (GT) announced that it plans to discontinue consumer tire production at a plant in Amiens, France as part of its strategy to reduce high-cost manufacturing capacity globally.
The action, which is expected to be complete by the third quarter of 2010, will result in a reduction of about 820 of the 1,200 total positions at the plant, which also produces farm tires. Shares of the tire giant are up by 6.5 percent, partly offsetting their recent losses.
Meanwhile, shares of Giant Interactive (GA) are under pressure after the company reported a 32 percent decrease in its first quarter profit. Giant Interactive is currently down 7.4 percent, falling to a six-week low.
In Focus: Consumer Confidence, Home Prices, GM, Obama Supreme Court Nomination
Consumer confidence showed a substantial improvement in the month of May, according to a report released by the Conference Board, with the consumer confidence index rising to its highest level in eight months.
The report showed that the consumer confidence index rose to 54.9 in May from an upwardly revised 40.8 in April. Economists had expected the index to edge up to 42.6 from the 39.2 originally reported for the previous month.
Meanwhile, a report released by Standard & Poor's showed that home prices continued to show record declines in the first quarter, with the data suggesting that the recent signs of stabilization in the housing market have not yet led to a turnaround in prices.
The report showed that the S&P/Case-Shiller U.S. National Home Price Index fell 19.1 percent in the first quarter compared to the same quarter a year ago. The decrease marked the steepest decline in the series' 21-year history.
S&P added that the 20-City Composite Home Price Index fell at an annual rate of 18.7 percent in March compared to economist estimates of an 18.4 percent decline. The 10-City Composite Home Price Index for March was down 18.6 percent year-over-year.
In corporate news, automaker General Motors may be placed in bankruptcy protection by the U.S. government some time within the coming week.
Under the tentative bankruptcy plan, GM could receive just short of $30 billion in additional federal loans, pushing the government's investment in the automaker to nearly $45 billion. The capital injection is reportedly a starting point in discussions and could be modified.
Meanwhile, President Barack Obama officially named Judge Sonia Sotomayor as his nominee for Supreme Court Justice late this morning. If confirmed, Sotomayor would become only the third woman to serve on the court and the first Hispanic.
Sotomayor, 54, currently serves on the United States Court of Appeals for the Second Circuit.
She is nominated to replace retiring Supreme Court Justice David Souter, who is known for his moderate views. So, if confirmed, Sotomayor is not expected to shift the ideological balance of the court.
In overseas trading, stock markets across the Asia-Pacific region finished mostly lower on Tuesday. Japan's benchmark Nikkei 225 Index slipped by 0.4 percent and Hong Kong's Hang Seng Index fell 0.8 percent.
Meanwhile, the major European markets closed notably higher after seeing some earlier weakness. The U.K.'s FTSE 100 Index closed up 1.1 percent, while the French CAC 40 Index and the German DAX are finished up by 1.1 percent and 1.3 percent, respectively.
In the bond markets, treasuries are currently showing moderate weakness after being unable to sustain early gains. Subsequently, the yield on the benchmark ten-year note is currently up 3.8 basis points at 3.486 percent after reaching a low of 3.395 percent.
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