U.S. Stocks Close Firmly Positive Despite Early Afternoon Swoon

(RTTNews) - Stocks showed a strong move to the upside in morning trading on Tuesday before pulling back sharply in the early afternoon. The major averages once again benefited from late-day strength, however, closing firmly in positive territory.

The Dow jumped 333.83 points or 1.0 percent to 33,160.83, ending the session at its best closing level in well over two months. The Nasdaq also climbed 51.68 points or 0.5 percent to 10,616.20, while the S&P 500 advanced 21.31 points or 0.6 percent to 3,828.11.

The higher close on the day reflected recent upward momentum, with the major averages adding to the strong gains posted Monday and last Friday to further offset last week's pullback.

The continued strength on Wall Street also came as traders awaited the outcome of today's U.S. midterm elections, which will determine control of Congress.

Republicans are expected to take control of the House and possibly the Senate, and traders are said to prefer a divided government, as times when the White House and Congress are controlled by opposite parties have historically been positive for Wall Street.

"We might not get all the results tonight but it seems Republicans have a very good shot at gaining control of the House and that could be confirmed early tomorrow morning," said Edward Moya, senior market analyst at OANDA.

Traders also continued to look ahead to Thursday's report on consumer price inflation, as the data could have a significant impact on the outlook for interest rates.

Economists expect a modest slowdown in the annual rate of consumer price growth, which could add to optimism about a slowdown in the pace of rate hikes.

The early afternoon pullback by stocks coincided with a steep drop by Bitcoin and other cryptocurrencies, which followed news Binance, the world's largest cryptocurrency exchange, reached a deal to buy competitor FTX.

Sector News

Gold stocks showed a substantial move to the upside on the day, resulting in a 6.4 percent spike by the NYSE Arca Gold Bugs Index. The index soared to its highest closing level in nearly four months.

The rally by gold stocks came amid a sharp increase by the price of the precious metal, with gold for December delivery surging $35.50 to $1,716 an ounce.

Semiconductor stocks also turned in a strong performance, driving the Philadelphia Semiconductor Index up by 2.2 percent to a one-month closing high.

Chemical stocks also saw considerable strength following upbeat earnings news from DuPont (DD), as reflected by the 1.8 jump by the S&P Chemical Sector Index. With the gain, the index reached best closing level in almost two months.

Steel, computer hardware and biotechnology stocks also showed notable moves to the upside, while tobacco stocks gave back ground.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index shot up by 1.3 percent, while China's Shanghai Composite Index fell by 0.4 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the German DAX Index jumped by 1.2 percent, the French CAC 40 Index rose by 0.4 percent and the U.K.'s FTSE 100 Index inched up by 0.1 percent.

In the bond market, treasuries showed a notable rebound after trending lower over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 8.8 basis points to 4.126 percent.

Looking Ahead

Trading on Wednesday may be impacted by reaction to the elections results, although trading activity is likely to be somewhat subdued ahead of the consumer price inflation report on Thursday.