Stocks Show Notable Rebound Following Retail Sales Report - U.S. Commentary

(RTTNews) - After moving sharply lower over the course of the previous session, stocks showed a strong move back to the upside during trading on Tuesday. The markets benefited from a positive reaction to the monthly retail sales report.

The major averages remained firmly positive going into the close, ending the session near their best levels of the day. The Dow jumped 115.92 points or 0.7 percent to 16,373.86, the Nasdaq soared 69.71 points or 1.7 percent to 4,183.02 and the S&P 500 surged up 19.68 points or 1.1 percent to 1,838.88.

The strength on Wall Street came following the release of a report from the Commerce Department showing stronger than expected retail sales growth in the month of December.

The report said retail sales edged up by 0.2 percent in December compared to economist estimates for a 0.1 percent increase.

The less volatile core retail sales, which exclude auto, gasoline, and building materials sales, also rose by more than expected.

At the same time, the Commerce Department said the retail sales growth in November was downwardly revised to 0.4 percent from the 0.7 percent originally reported.

Peter Boockvar, chief market analyst at the Lindsey Group, said, "Retail sales in December were better than forecasted but if we include the November downward revisions, the two months taken together are about in line."

"Bottom line, because the December beat was offset by the November miss, Q4 GDP estimates should not change on this number," he added.

Traders were also digesting quarterly results from financial giants JP Morgan (JPM) and Wells Fargo (WFC) as the earnings season starts to pick up steam.

JP Morgan reported fourth quarter net income that fell year-over-year, but its adjusted earnings exceeded analyst estimates. Wells Fargo said its fourth quarter earnings rose by 10 percent, coming in just above expectations.

Sector News

While most of the major sectors moved to the upside on the day, biotechnology stocks posted particularly strong gains. The NYSE Arca Biotechnology Index surged up by 4/3 percent, reaching a new record closing high.

Regeneron (REGN), ImmunoGen (IMGN), and Incyte (INCY) turned in some of the biotech sector's best performances.

Electronic storage stocks also moved sharply higher, driving the NYSE Arca Disk Drive Index up by 2.4 percent. Hutchison Technology (HTCH) and Quantum (QTM) posted notable gains after providing upbeat guidance.

Significant strength was also visible among semiconductor stocks, as reflected by the 2.3 percent gain posted by the Philadelphia Semiconductor Index. Intel (INTC) helped lift the index to a six-year closing high after JP Morgan upgraded its rating on the semiconductor giant.

Computer hardware, software, airline, and chemical stocks also moved notably higher on the day, reflecting broad based buying interest.

Meanwhile, gold stocks bucked the uptrend by the broader markets amid a decrease by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index tumbled by 3.1 percent, while Hong Kong's Hang Seng Index ended the day down by 0.4 percent.

Meanwhile, the major European markets turned higher over the course of the session. While the U.K.'s FTSE 100 Index edged up by 0.1 percent, the German DAX Index and the French CAC 40 Index both rose by 0.3 percent.

In the bond market, treasuries gave back some ground after moving notably higher over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.2 basis points to 2.869 percent.

Looking Ahead

Wednesday's trading could be impacted by the release of reports on producer price inflation and New York manufacturing activity as well as the Federal Reserve's Beige Book.

Earnings news from Bank of America (BAC) may also attract some attention, with the financial giant due to report its fourth quarter results before the start of trading on Wednesday.