Upbeat Economic Data Contributes To Rally On Wall Street - U.S. Commentary

(RTTNews) - Stocks moved sharply higher over the course of the trading session on Tuesday, more than offsetting the weakness seen in the previous session. With the strong gains on the day, the major averages reached their best closing levels in almost two months.

The major averages ended the day at their highs for the session. The Dow jumped 348.58 points or 2.1 percent to 16,865.08, the Nasdaq soared 131.65 points or 2.9 percent to 4,689.60 and the S&P 500 spiked 46.12 points or 2.4 percent to 1,978.35.

The rally on Wall Street came following the release of some upbeat U.S. economic data, including a report from the Institute for Supply Management showing a bigger than expected increase by its index of manufacturing activity in February.

The ISM said its purchasing managers index rose to 49.5 in February from 48.2 in January, although a reading below 50 continues to indicate a contraction in manufacturing activity. Economists had expected the index to inch up to 48.5.

Bradley J. Holcomb, chair of the ISM Manufacturing Business Survey Committee, said, "Comments from the panel indicate a more positive view of demand than in January, as 12 of our 18 industries report an increase in new orders."

A separate report from the Commerce Department showed a notable increase in construction spending in the month of January.

The report construction spending surged up by 1.5 percent to an annual rate of $1.141 trillion in January from the revised December estimate of $1.124 trillion. Spending had been expected to rise by 0.5 percent.

With the bigger than expected increase, the annual rate of construction spending reached its highest level since October of 2007.

Buying interest was also generated by an increase by the price of crude oil, which has recently been a key driver of the markets.

Crude oil for April delivery climbed $0.65 to a nearly two-month closing high of $34.40 a barrel after advancing $0.97 to $33.75 a barrel in the previous session.

Sector News

Most of the major sectors showed strong moves to the upside on the day, reflecting broad based buying interest on Wall Street.

Biotechnology stocks posted particularly strong gains, resulting in a 5 percent jump by the NYSE Arca Biotechnology Index. With the gain, the index reached its best closing level in a month.

Agios Pharmaceuticals (AGIO) and Juno Therapeutics (JUNO) turned in two of the biotech sector's best performances, surging up by 13.2 percent and 13.5 percent, respectively.

Substantial strength was also visible among banking stocks, as reflected by the 4.7 percent gain posted by the Dow Jones Banks Index. The index also ended the session at a one-month closing high.

Steel, brokerage, software, and computer hardware stocks also saw notable strength, while gold stocks bucked the uptrend amid a decrease by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index rose by 0.4 percent, while Hong Kong's Hang Seng Index surged up by 1.6 percent.

The major European markets also moved to the upside on the day. While the German DAX Index jumped by 2.3 percent, the French CAC 40 Index shot up by 1.2 percent and the U.K.'s FTSE 100 Index advanced by 0.9 percent.

In the bond market, treasuries moved notably lower following the release of the upbeat U.S. data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 9.4 basis points to 1.834 percent.

Looking Ahead

Trading on Wednesday may be impacted by reaction to a report on private sector employment as well as the Federal Reserve's Beige Book.