NEW YORK: U.S. stocks surged to close higher Tuesday as a rally in financial and technology shares underpinned a sharp, broadly based stock-market advance.
The Dow Jones Industrial Average DJIA, +1.22% rallied 213.12 points, or 1.2%, to close at 17,706.05, its largest one-day percentage gain since March 11.
Twenty-nine of the 30 blue-chip components traded higher, led by more than 2% gains by Microsoft Corp. MSFT, +3.12% and Intel Corp. INTC, +2.75% , and strong showings from financial firms American Express Co. AXP, +2.01% Visa Inc. V, +2.81% J.P. Morgan Chase & Co. JPM, +1.70% and Goldman Sachs Group GS, +1.38% Boeing Co. BA, -0.06% shares declined less than 0.1%
The S&P 500 Index SPX, +1.37% jumped 28.02 points, or 1.4%, to 2,076.06 as all 10 of its main sectors traded in positive territory. Similarly, Tuesday’s gain was the largest percentage gain for the index since March 11. Among the S&P 500 shares, nearly a fifth were up more than 2%, another 40% were up more than 1%, while less than 10% were in negative territory.
Meanwhile, the Nasdaq Composite Index COMP, +2.00% surged 95.27 points, or 2%, to 4,861.06, its strongest one-day gain since March 1.
Tuesday’s rally comes on the heels of hawkish minutes from the Federal Reserve’s latest policy meeting and comments from several officials that rate increases may come as soon as next month.
At last check, Wall Street is pricing in a 38% chance of a June hike and a 58% chance of a July move, according to the CME Group’s FedWatch tool.
There’s little rational backing for Tuesday’s rally, said Peter Boockvar, chief market analyst for The Lindsey Group, in an interview. Catalysts, however, include the weak euro and its boost to European stocks, and strong housing data following last week’s market selloff.
Indeed, the sale of new homes surged 16.6% in April, representing the largest monthly jump in 24 years — a sign that builders are stepping up as demand for housing remains robust.
Still, market watchers said the recent swings in the market are a reflection of investor anxiety about the prospect of rate hikes.
“We’re still churning ourselves to death here,” said Boockvar. “With the tight trading range we’re in, the market is bipolar day to day.” Over the past two months, the S&P 500 has traded within a 90-point range, and is only up about 1%, with much of that pegged to Tuesday’s gains.
Technical analysts view the sustainability of this recent rally as depending on stock indexes’ ability to trade above key levels.
“Today’s big jump is purely a technical bounce and if [the S&P 500 holds] above the 50-day moving average, which we just crossed over, we might see some more upside in the market,” said Lance Roberts, chief investment strategist at Clarity Financial LLC.
Roberts said the big positive moves over the past few months tended to be erased by equally big negative moves, while the market is trapped in a range.
“The 2,040 seems to be a resistance level, and breaking below that would mean further weakness in the market. The path of least resistance right now is a trend lower,” Roberts said.
