Stocks Close Sharply Higher Even As Fed Decision Looms - U.S. Commentary

(RTTNews) - With traders seemingly shrugging off any uncertainty ahead of tomorrow's monetary policy decision, stocks moved sharply higher over the course of the trading day on Tuesday. The gains on the day extended a recent upward trend, with the major averages reaching their best closing levels in a month.

The major averages saw further upside going into the close, ending the day at their highs for the session. The Dow jumped 187.81 points or 1.1 percent to 17,005.75, the Nasdaq soared 78.36 points or 1.8 percent to 4,564.29 and the S&P 500 surged up 23.42 points or 1.2 percent to 1,985.05.

The strength on Wall Street partly reflected a positive reaction to the latest batch of earnings news from several big-name companies.

Biotech giant Amgen (AMGN) posted a standout gain after reporting better than expected third quarter results. The company also raised its full-year guidance and increased its dividend.

Buffalo Wild Wings (BWLD) and AutoNation (AN) also turned in particularly strong performances after reporting third quarter results that exceeded analyst estimates.

Positive sentiment was also generated by a report from the Conference Board showing a notable improvement in consumer confidence in the month of October.

The Conference Board said its consumer confidence index climbed to 94.5 in October from an upwardly revised 89.0 in September. Economists had expected the index to edge up to 87.0 from the 86.0 originally reported for the previous month.

With the increase, the consumer confidence index more than offset the drop seen in the previous month to reach its highest level since October of 2007.

Lynn Franco, Director of Economic Indicators at the Conference Board, said, "With the holiday season around the corner, this boost in confidence should be a welcome sign for retailers."

Meanwhile, the Conference Board released a separate report before the start of trading showing an unexpected drop in durable goods orders in the month of September.

The report said durable goods orders fell by 1.3 percent in September after plunging by 18.3 percent in August. The continued decrease came as a surprise to economists, who had expected orders to increase by about 0.5 percent.

Sector News

Oil service stocks showed a substantial move back to the upside after seeing considerable weakness in the previous session. The Philadelphia Oil Service Index surged up by 3.4 percent, offsetting yesterday's 3.4 percent drop.

The rebound by oil service stocks came amid an increase by the price of crude oil, with crude for December delivery climbing $0.42 to $81.42 a barrel.

Significant strength was also visible among airline stocks, as reflected by the 3 percent gain posted by the NYSE Arca Airline Index. The gain extended a recent upward move by the index, which reached its best closing level in well over a month.

Within the airline sector, Spirit Airlines (SAVE) posted a standout gain after reporting better than expected third quarter earnings.

Networking stocks also turned in a strong performance on the day, driving the NYSE Arca Networking Index up by 2.9 percent. Polycom (PLCM) and Juniper Networks (JNPR) helped lead the sector higher.

Natural gas, computer hardware, steel, and brokerage stocks also saw considerable strength amid a broad-based rally on Wall Street.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Tuesday. Japan's Nikkei 225 Index fell by 0.4 percent, while Hong Kong's Hang Seng Index surged up by 1.6 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the German DAX Index jumped by 1.9 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index climbed by 0.6 percent and 0.4 percent, respectively.

In the bond market, treasuries moved moderately lower, extending a recent downward trend. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.7 basis points to 2.284 percent.

Looking Ahead

The Federal Reserve's monetary policy announcement is likely to be in the spotlight on Wednesday, with the central bank expected to wrap up its asset purchase program.

Early trading could also be impacted by reaction to earnings news from Facebook (FB), as the social media giant is releasing its third quarter results after the close of today's trading.