Tuesday’s trading session was a comeback day for the benchmarks as they recorded their best gains this year just a day after suffering heavy losses. Retail sales data was a big boost for the markets along with gains in the technology sector. The gains eroded most of yesterday’s losses and diluted concerns arising out of Friday’s weaker-than-expected nonfarm payroll data.
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The Dow Jones Industrial Average jumped about 116 points or 0.7% to close at 16,373.86. The Standard & Poor 500 (S&P 500) closed yesterday’s session at 1,838.88, up 1.1%. The tech-laden Nasdaq Composite Index was the biggest gainer among these benchmarks, rising 1.7% to 4,183.02. Volumes on the U.S. exchanges were 6.5 billion shares, almost in line with the year-to-date average. The advancers well outpaced the declining stocks on the New York Stock Exchange, as for 12 stocks that gained, 5 ended in the red.
On Monday benchmarks had incurred heavy losses on concerns about corporate earnings numbers and comments from a Fed official hinting at additional tapering. Friday’s nonfarm payroll data also somewhat dented the indices. However, Tuesday’s robust gains saw the benchmarks return to winning ways and they accrued large gains. Additionally, the fear-gauge CBOE Volatility Index (VIX) dropped 7.5% to settle at 12.28.
The S&P 500 not only enjoyed its biggest gain this year on Tuesday, but it rose the most since Dec 18. This came just a day after S&P 500 had suffered the worst loss in two months. The Dow rose only for the third day this year. Yesterday’s gains were also crucial for offsetting some of the losses this year. For the year, the Dow, S&P 500 and Nasdaq are now down 1.2%, 0.5% and 0.2%, respectively.
The big gains came mostly on the back of retail sales data and the tech sector’s positive finish. The U.S. Department of Commerce reported a 0.2% increase in the advance estimates of U.S. retail and food services sales for December. These numbers are not adjusted for price changes. The 0.2% month-on-month gain beat the 0.1% consensus estimate and took retail sales higher to $431.9 billion in December. Excluding spending on autos, gas and building supplies, sales rose 0.7%, outpacing the consensus estimate of 0.4%.
The SPDR S&P Retail ETF (XRT) gained 1.1% and retail stocks including Macy’s, Inc. (NYSE:M), Kohl’s Corporation (NYSE:KSS), Dillard’s, Inc. (NYSE:DDS) and J.C. Penney Company, Inc. (NYSE:JCP) jumped 0.9%, 1.4%, 1.9%, 3.1%, respectively.
Talking of sectoral performances, it was the technology sector that was among the biggest gainers and it also helped the broader markets advance. The Technology Select Sector SPDR (XLK) jumped 1.7%. Tech heavyweights such as Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), International Business Machines Corp. (NYSE:IBM), Intel Corporation (NASDAQ:INTC) and Advanced Micro Devices, Inc. (NYSE:AMD) gained about 2.0%, 2.3%, 1.0%, 4.0% and 4.1%, respectively.
Also, earnings releases from JPMorgan Chase & Co. (NYSE:JPM) (0.1%) and Wells Fargo & Co (NYSE:WFC) brought some cheer to the markets. Both of them gained about 0.1% after JPM reported profits in almost all its divisions but investment banking, and Wells Fargo saw its net income rise 11%. Key companies from the banking industry like Bank of America Corp (NYSE:BAC), Goldman Sachs Group Inc (NYSE:GS), Morgan Stanley (NYSE:MS) and Citigroup Inc (NYSE:C) are scheduled to report their performances this week.
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