Market Wrap for Tuesday, March 26: Stocks Recoup Monday's Losses; Dow Adds 112
Investors pushed the major averages higher on Tuesday a day after the market fell in the wake of a bailout for Cyprus.
Sentiment was boosted by a series of economic reports in the United States that showed the housing market is on the mend and the economy remains stable. Consumer confidence data, however, was a surprise disappointment.
Nevertheless, investors were looking to take risk as the markets may be prepared to move beyond the situation in Cyprus next week.
The Dow Jones Industrial Average climbed 112 points, or 0.77 percent, to 14,560.
The S&P 500 rose better than 12 points, or 0.78 percent, to 1,564.
The Nasdaq added 17 points, or 0.53 percent, to 3,252.
Durable Goods Orders
Durable goods orders surged 5.7 percent in February after declining 3.8 percent in January. This compared to consensus expectations of a rise of 3.8 percent for the month.
The strength in the report was largely due to transportation with transportation equipment orders jumping 21.7 percent. Not including transportation, durable goods orders declined 0.5 percent.
Consumer confidence data released on Tuesday was a cause for concern. The Conference Board's Consumer Confidence report for March showed a steep decline to 59.7 from 68.0 in the prior month. This was way below economists' consensus estimates of a decline to 65.0. The Expectations Index also fell from 72.4 down to 60.9.
Although confidence is important to economic activity, the primary driver is income growth. The steep decline, however, suggests that the consumer outlook is not as rosy as had been hoped.
New Home Sales
New home sales fell 4.6 percent on a month-over-month basis in February to a seasonally adjusted annual rate of 411,000. This missed consensus estimates of 426,000, but was a significant 12.3 percent increase over last year.
On a regional basis, sales fell 13.3 percent in the Northeast, rose 13.7 percent in the Midwest, fell 9.7 percent in the South and declined 2.1 percent in the West. Nevertheless, the data was strong on a year-over-year basis and the housing market remains on an upward trajectory.
Late in Tuesday's trading session, the entire energy complex was moving higher. At last check, NYMEX crude futures had risen 1.57 percent to $96.30 while Brent contracts were up 1.08 percent to $109.34. Natural gas had added almost 3 percent to $3.98 near the close of equities.
Precious metals were trading moderately lower towards the end of the equity session. COMEX gold futures had lost 0.39 percent to $1,600.40 while silver was off by 0.43 percent to $28.70. Copper futures were last up 0.28 percent.
In the grains complex, corn and wheat were mixed. Corn was last down a little less than 0.50 percent while wheat rose better than 0.50 percent on the day. Movers in soft commodities included coffee, which rose 1.50 percent, and sugar, which was down better than one percent.
Heading into the closing bell, the iShares Barclays 20+ Year Treasury Bond ETF (NYSE: TLT) was up 0.11 percent to $117.35. The small gain for bonds pushed yields lower.
The 2-Year Note yield was unchanged at 0.25 percent, but the 5-Year Note yield fell by one basis point to 0.77 percent.
The yield on the 10-Year Note and 30-Year Bond fell two and one basis point to 1.90 percent and 3.14 percent, respectively.
The U.S. dollar was unchanged on Tuesday, with the PowerShares DB US Dollar Index Bullish ETF (NYSE: UUP), which tracks the performance of the greenback versus a basket of foreign currencies, trading around the flat-line late in the day.
The closely watched EUR/USD pair was also unchanged on the session at $1.2857. The USD/JPY rose 0.34 percent on Tuesday while the USD/CAD fell 0.51 percent.
Volatility and Volume
The VIX fell sharply on Tuesday as the Dow climbed better than triple digits. The widely watched fear guage lost almost 8 percent to 12.70.
Volume was noticeably light on the day, with less than 75 million SPDR S&P 500 ETF (NYSE: SPY) shares trading hands compared to a 3-month daily average of 129 million.
Shares of Ziopharm Oncology (NASDAQ: ZIOP) collapsed on Tuesday after the company ended development of its cancer drug palifosamide. The treatment had failed to stop disease progression in a late-stage trial. The stock was last down around 65 percent near the close.
Fast-food operator Sonic (NASDAQ: SONC) surged almost 9 percent after the company released bullish fiscal Q2 results after the closing bell on Monday.
Chipmaker RF Micro Devices (NASDAQ: RFMD) jumped around 7 percent after analysts at Oppenheimer upgraded the stock to Outperform with a $7 price target.
Gordmans Stores (NASDAQ: GMAN) plunged more than 15 percent after the company reported disappointing fiscal Q4 earnings results.
Shares of Netflix (NASDAQ: NFLX) surged after analysts at Pacific Crest raised their price target on the stock to $225 and also provided some bullish commentary on the name. Heading into the close, NFLX had risen more than 5 percent.
Calumet Specialty Products Partners (NASDAQ: CLMT) fell around 4.50 percent after announcing a secondary offering of 5.25 million units priced at a 4.1 percent discount to Monday's closing price.
Retailer Children's Place (NASDAQ: PLCE) fell around 3 percent on the session after the company reported an 18 percent decline in fiscal fourth-quarter earnings.
Hard-drive makers Seagate Technology (NASDAQ: STX) and Western Digital (NYSE: WDC) both rose around 3 percent on Tuesday after analysts at Brean Capital said that March quarter earnings may surpass Wall Street estimates.
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