Stocks Close Sharply Higher Following Last Week's Pullback - U.S. Commentary

(RTTNews) - Stocks moved sharply higher over the course of the trading day on Tuesday, partly offsetting the weakness that was seen last week. The rally on the day extended the volatility seen in the markets over the past several sessions.

The major averages saw further upside going into the close, ending the session near their best levels of the day. The Dow jumped 390.30 points or 2.4 percent to 16,492.68, the Nasdaq soared 128.01 points or 2.7 percent to 4,811.93 and the S&P 500 surged up 48.19 points 2.5 percent at 1,969.41.

Early buying interest was generated in reaction to strength among Chinese stocks, which surged higher in the latter part of the trading day.

China's Shanghai Composite Index jumped by 2.9 percent on the day, contributing to a rally in other overseas markets.

The late-day strength in the Chinese market suggests state intervention despite recent reports indicating the government has abandoned attempts to boost the stock market through large-scale share purchases.

Nonetheless, the upward move on Wall Street may have been exaggerated by light trading activity, as some traders remained away from their desks following the holiday on Monday.

Some traders also likely stayed on the sidelines amid the lack of major U.S. economic data due to be released on the day.

The economic calendar remains relatively light throughout the holiday-shortened week, although traders are likely to keep a close eye on reports on weekly jobless claims, producer prices, and consumer sentiment.

Last week's mixed jobs data is likely to increase the focus on the other economic reports due to be released in the days leading up to the Federal Reserve's monetary policy announcement next week.

Among individual stocks, shares of Teco Energy (TE) moved sharply higher after the electric and gas utility holding company agreed to be acquired by Canadian energy company Emera for $6.4 billion.

Diversified media company Meredith (MDP) also turned in a strong performance after agreeing to be acquired by Media General (MEG) in an approximately $2.4 billion cash-and-stock deal.

On the other hand, shares of Concordia (CXRX) came under pressure after the healthcare company agreed to buy Amdipharm Mercury Ltd. for about $3.5 billion in cash and stock.

Sector News

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

Semiconductor stocks posted particularly strong gains, with the Philadelphia Semiconductor Index surging up by 4.4 percent. With the gain, the index reached its best closing level in three weeks.

Microchip Technology (MCHP) helped to lead the semiconductor sector higher, jumping by 9.4 percent after raising its second quarter earnings and sales guidance.

Considerable strength also emerged among biotechnology stocks, as reflected by the 3.9 percent gain posted by the NYSE Arca Biotechnology Index. Regeneron (REGN) and Alnylam (ALNY) turned in two of the sector's best performances.

Railroad, steel, software, and computer hardware stocks also saw significant strength on the day, reflecting the broad based rally.

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 plunged by 2.4 percent, while Hong Kong's Hang Seng Index surged up by 3.3 percent.

Meanwhile, the major European markets all moved sharply higher on the day. While the German DAX Index jumped by 1.6 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index surged up by 1.2 percent and 1.1 percent, respectively.

In the bond market, treasuries showed a notable move back to the downside, offsetting the upward move seen over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, advanced 6.6 basis points to 2.194 percent.

Looking Ahead

Trading on Wednesday may be impacted by the latest developments overseas another light day on the U.S. economic front.