Benchmarks carried their winning momentum into the
second-consecutive trading day, banking on optimism about
positive developments regarding the "fiscal cliff" dilemma.
Markets were also encouraged by a couple of strong corporate
results and positive existing home sales data. The
positives combined to help the Dow register its biggest gain
since September 6. Technology and the material sectors emerged as
the biggest gainers among the S&P 500 industry groups.
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The Dow Jones Industrial Average (DJI) surged 1.7% to close the
day at 12,795.96. The Standard & Poor 500 (S&P 500)
jumped 2.0% to finish yesterday's trading session at 1,386.89.
The tech-laden Nasdaq Composite Index gained 2.2% to end at
2,916.07. The fear-gauge CBOE Volatility Index (VIX) tumbled 7.1%
to settle at 15.24. Consolidated volumes on the New York Stock
Exchange, American Stock Exchange and Nasdaq were roughly 6.14
billion shares, significantly lower than the daily average of
6.49 billion shares. Advancing stocks easily outpaced decliners
on the NYSE; as for 87% stocks that rose, only 11% stocks moved
On Friday, markets had ended significantly higher after investors
were encouraged by suggestions of positives arising out of the
"constructive" meeting among the nation's top leaders. The
positive mood spilled onto Monday as well and the blue-chip index
registered its best day performance in more than two months.
Also, S&P 500 posted its biggest gain since November 6.
At the meeting last week, Democrats supported spending cuts and
Republicans were ready to put "revenue on the table". Striking a
positive note and highlighting constructive discussions, House
Speaker John Boehner said: "It is going to be incumbent for my
colleagues to show the American people that we're serious about
cutting spending and solving our fiscal dilemma… I believe that
we can do this and avert the fiscal cliff that right in front of
President Barack Obama held a series of meeting during the
previous week on the fiscal cliff issue, which has been affecting
market movement. Investors have been worried about this issue
since Election Day and benchmarks have lost roughly 5% from
November 4. The $600 billion deficit reduction plan is slated to
come into effect at the beginning of 2013. If Washington fails to
reach a deal regarding tax hikes and budget cuts, experts project
that the economy may slip into another recession.
Markets were also boosted yesterday by the better-than-expected
quarterly results of two companies. Lowe's Companies, Inc. (NYSE:
) reported its quarterly results which came above the analysts'
estimates. The company has also increased its full-year sales
estimates. Lowe's shares surged 6.2% yesterday and touched a
52-week high of $33.96. Tyson Foods, Inc. (NYSE:
) jumped 10.9% after the company reported its fourth-quarter
profits, which stormed past the Street's estimates.
Meanwhile, National Association of Realtors reported that
existing home sales increased in October. Existing home sales
rose 2.1% to a seasonally adjusted annual rate of 4.79 million in
October from September's revised figure of 4.69 million.
According to Lawrence Yun, NAR's chief economist, "Home sales
continue to trend up and most October transactions were completed
by the time the storm hit, but the growing demand with limited
inventory is pressuring home prices in much of the
country". "We expect an impact on Northeastern home sales
in the coming months from a pause and delays in storm-impacted
regions," he added
Following encouraging housing data homebuilding stocks got a
boost and the SPDR S&P Homebuilders (XHB) surged 2.3%. Stocks
such as The Home Depot, Inc. (NYSE:
), Toll Brothers Inc (NYSE:
), Meritage Homes Corporation (NYSE:
) and PulteGroup, Inc. (NYSE:
) rose 2.0%, 0.6%, 1.3% and 1.4%, respectively.
The technology sector also had a good run yesterday and the
Technology SPDR (XLK) surged 2.7%. Stocks such as Apple Inc.
), Hewlett-Packard Company (NYSE:
), Microsoft Corporation (NASDAQ:
), Google Inc (NASDAQ:
) and Oracle Corporation (NASDAQ:
) jumped 7.2%, 3.5%, 0.8%, 3.3% and 0.5%, respectively.