Stocks jumped on Tuesday as investors went on a buying binge. The S&P 500 turned positive for the year and rose above its 200-day moving average for the first time in a month, suggesting the recent downtrend may be nearing an end.
Investors were motivated by successful debt auctions in Spain, Belgium and Ireland, which lifted some of the gloom over Europe's debt crisis. The euro rallied against the dollar and pushed commodity prices higher.
You are seeing renewed confidence, and it's certainly evident in the price action in the euro, said Tom Schrader, managing director of U.S. equity trading at Stifel Nicolaus Capital Markets in Baltimore. There's definitely a trend toward returning to risky assets.
Semiconductor shares led the way after two large Taiwanese chip producers pointed to growing global demand. Intel Corp rose 2.8 percent, while the Philadelphia semiconductor index <.SOXX> shot up 5.5 percent.
Stocks linked to global growth also rallied sharply, with heavy equipment maker Caterpillar Inc up 4 percent at $63.46. Other multinationals with heavy exposure to Europe, such as aircraft maker Boeing Co , also climbed in sync with the euro. Boeing was up 4.1 percent at $67.48 and contributed the most to the Dow's advance.
In a sign of a robust equity market, shares of CBOE Holdings Inc jumped as much as 16.4 percent in their stock market debut as investors saw bright prospects for the parent of the Chicago Board Options Exchange. The $339 million IPO was the biggest this year. CBOE's stock ended at $32.49, up 12 percent from its offering price of $29.
The Dow Jones industrial average <.DJI> gained 213.88 points, or 2.10 percent, to 10,404.77. The Standard & Poor's 500 Index <.SPX> gained 25.60 points, or 2.35 percent, to 1,115.23. The Nasdaq Composite Index <.IXIC> gained 61.92 points, or 2.76 percent, to 2,305.88.
The S&P 500's rise lifted the index above its 200-day moving average, a level it has struggled to breach for the last month, and a milestone that could signal bullish momentum for investors. Although volume was moderate, the number of advancing stocks on NYSE ran far ahead of decliners.
The index last closed above its 200-day moving average on May 19.
Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Nashville, said the move signaled a new trading range for the traditionally slower summer months. But he doubted the market would see another move higher in coming weeks.
The market was ready to break out, he said. We are going to slip into a trading range now where 1,050 is the risk and 1,170 is the reward on the S&P 500.
The euro, used to assess risk appetite in the current climate of concern about Europe's debt situation, rose above $1.23 versus the dollar to its highest level since June 3.
The CBOE volatility index <.VIX>, a gauge of Wall Street's anxiety, fell 9.5 percent to 25.87, its lowest level since the middle of May.
Semiconductor stocks helped lift the Nasdaq after TSMC <2330.TW> and UMC <2303.TW>, the world's two largest contract chip makers, forecast growing demand in the coming months amid an improving global economy and rising sales of new personal computers and other consumer gadgets.
Intel Corp , the world's dominant chipmaker, added 2.8 percent to $21.48, while Broadcom Corp climbed 5.7 percent to $35.84, and Marvell Technology Group Ltd surged 8.3 percent to $18.94.
Buyers also snapped up beaten-down energy names as industry executives were grilled by a congressional panel, with some investors betting the stocks may have hit a bottom.
An S&P energy stock index <.GSPE> gained 2.7 percent, with the U.S.-listed shares of BP Plc up 2.4 percent at $31.39. Halliburton Co rose 6 percent to $25.46, while Cameron International Corp gained 4.4 percent to $37.38.
About 8.41 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, sharply below last year's estimated daily average of 9.65 billion.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 6 to 1, while on the Nasdaq, about four stocks rose for every one that fell.
(Reporting by Edward Krudy; Editing by Jan Paschal)