Encouraging factory orders data and an uptick in commodity
prices lifted the benchmarks to their third-straight day of gains.
Additionally, lingering hopes of economic measures by the central
bank kept the positive mood alive. Volumes were at a record low and
it was a holiday-shortened trading session ahead of the
Independence Day when markets remain closed.
The Dow Jones Industrial Average (DJI) moved up 0.6% and closed
at 12,943.82. The Standard & Poor 500 (S&P 500) also gained
0.6% and finished Tuesday's shortened session at 1,374.02. The
tech-laden Nasdaq Composite Index added 0.8% and ended at 2,976.08.
The fear-gauge CBOE Volatility Index (VIX) edged down 0.8% and
settled at 16.6. Thanks to the truncated trading session,
consolidated volumes on the New York Stock Exchange, American Stock
Exchange and Nasdaq were at their lowest for this year, at 3.78
billion shares. Moreover, the Street would maintain a holiday on
July 4th, owing to the Independence Day. Advancers easily outpaced
declining stocks on the NYSE; as for 76% stocks that gained, 20%
stocks closed lower.
Domestic developments dominated the proceedings on Tuesday and
better-than-expected data on factory orders was all the more
encouraging as it came just a day after the ISM Manufacturing Index
reported a contraction in new orders for the first time since April
2009. Taking the opposite route, the U.S. Department of Commerce's
report on new orders for manufactured goods showed an incremental
trend in May, after two consecutive months of declines. New orders
for manufactured goods moved up 0.7% or $3.3 billion to $469.0
billion in May. The rate of increase was substantially higher than
consensus estimates of a rise of 0.1%.
The report comes after a dismal showing of the ISM Manufacturing
Index. However, dismal economic readings spurred hopes that the
U.S. Federal Reserve would step up measures to bolster the economy.
Investors have been hopeful about a third round of monetary policy
measures ever since the second one ended. Lingering hopes lifted
the benchmarks whenever they gained strength, but these
speculations have so far been dashed as the central bank has never
announced anything definite. Market onlookers' recent hopes are
based on the fact that economic readings have been poor and that
should set up the stage for a third round of quantitative easing.
Such hopes gained strength on Tuesday and helped to keep benchmarks
afloat in positive territory.
Markets also received a boost from a strong rally in the energy
sector, which was in turn due to high energy prices. Concerns over
supplies from Iran increased, as the nation blocked a key route in
the Persian Gulf, leading to higher oil prices. While Brent crude
was at its highest level in three weeks, U.S. crude gained $3.50 to
move up to $87.25 per barrel. Thus, the energy sector enjoyed a
strong rally and the Energy Select Sector SPDR (XLE) jumped 2.4%.
Among the energy shares, Hess Corp. (NYSE:
), Western Refining, Inc. (NYSE:
), Tesoro Corporation (NYSE:
), Murphy Oil Corporation (NYSE:
), Valero Energy Corporation (NYSE:
) and Marathon Oil Corporation (NYSE:
) jumped 4.2%, 4.1%, 3.1%, 2.4%, 3.4% and 2.8%, respectively.
HESS CORP (HES): Free Stock Analysis Report
MARATHON OIL CP (MRO): Free Stock Analysis
MURPHY OIL (MUR): Free Stock Analysis Report
TESORO CORP (TSO): Free Stock Analysis Report
VALERO ENERGY (VLO): Free Stock Analysis Report
WESTERN REFING (WNR): Free Stock Analysis
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