U.S. stocks rose on Tuesday on speculation that weaker consumer confidence and a record plunge in home prices will ensure the Federal Reserve to maintain interest rates at current levels, while United Parcel Service set new multiyear low.
UPS slashed its second-quarter earnings prediction late Monday, citing soaring fuel prices and a slump in domestic demand. Citigroup Inc., JPMorgan Chase & Co. and Bank of America Corp. led financial shares up as traders increased bets that the Fed will leave borrowing costs unchanged until at least September.
The Conference Board said its June reading of consumer confidence index came in at 50.4, well below economists' expectations and the previous month's levels.
The Standard & Poor's 500 Index added 5.53 points, or 0.4 percent, to 1,323.53 at 1:07 p.m. in New York after earlier dropping as much as 1 percent. The Dow Jones Industrial Average increased 41.28, or 0.4 percent, to 11,883.64. The Nasdaq Composite Index gained 1.51, or 0.1 percent, to 2,387.25.
Shares of UPS hit their lowest point since June 2003 during early morning trading, while rival FedEx hit a low set nearly two years ago. UPS reported earnings of 83 cents to 88 cents a share, down from the range of 97 cents to $1.04 projected on April 23. The average estimate of 16 analysts surveyed by Bloomberg was 98 cents. UPS lost $2.96, or 4.5 percent, to $63.30, an almost-five-year low.
FedEx shares later recovered as the broader markets edged up around midday - rising 34 cents to $80.47 after going as low as $78.45.
Citigroup, the largest U.S. bank by assets, added 50 cents to $19.05. Bank of America, the second-biggest, climbed 79 cents to $26.67. JPMorgan, the No. 3, jumped $1.04 to $37.91.