U.S. stocks surge as con­sumer con­fi­dence rises

Dow up 150 points as fi­nan­cial, en­ergy stocks lead gains.

Austin American-Statesman - - MONEY & MARKETS -

Banks and other fi­nan­cial com­pa­nies led U.S. stock in­dexes sharply higher Tuesday, snap­ping an eight-day los­ing streak for the Dow Jones in­dus­trial av­er­age.

The rally was broad, with ma­te­ri­als and in­dus­trial com­pa­nies among the big­gest gain­ers. En­ergy stocks notched a big gain as crude oil prices moved higher.

The market got a boost from new data show­ing that con­sumer con­fi­dence in the U.S. hit its high­est level since 2000.

In­vestor op­ti­mism that Congress and the White House are piv­ot­ing to tax cuts and other business-friendly pol­icy pro­pos­als af­ter spend­ing re­cent weeks fo­cused on health care also helped send the market higher, said JJ Ki­na­han, chief market strate­gist at TD Amer­i­trade.

“The con­sumer con­fi­dence num­ber was re­ally good, but more im­por­tantly, it seems like both sides of the aisle do want to get some­thing done around tax re­form,” Ki­na­han said. “That’s all the market is re­ally hang­ing its hat on.”

The Dow rose 150.52 points, or 0.7 per­cent, to 20,701.50. The 30-com­pany av­er­age’s de­cline in the pre­vi­ous eight con­sec­u­tive days was its longest slide in more than five years. The Stan­dard & Poor’s 500 in­dex added 16.98 points, or 0.7 per­cent, to 2,358.57. The Nas­daq com­pos­ite in­dex gained 34.77 points, or 0.6 per­cent, to 5,875.14.

Bond prices edged lower. The 10-year Trea­sury yield rose to 2.42 per­cent from 2.38 per­cent.

Since Don­ald Trump’s pres­i­den­tial elec­tion win last Novem­ber, in­vestors have been op­ti­mistic that the ad­min­is­tra­tion would de­liver on prom­ises to slash taxes, loosen reg­u­la­tions for com­pa­nies and in­sti­tute other business-friendly poli­cies. Repub­li­cans’ fail­ure to re­peal the Af­ford­able Care Act last week dashed some of that op­ti­mism, pulling down stocks. But this week, Repub­li­cans ap­pear to be shift­ing their fo­cus back on tax cuts, among other is­sues.

“The market is sort of in a hold­ing pat­tern wait­ing for ad­di­tional clar­ity from the ad­min­is­tra­tion on cor­po­rate tax re­form,” said Na­dia Lovell, U.S. eq­uity strate­gist at J.P. Mor­gan Pri­vate Bank. “We do view the pivot away from health care re­form on Fri­day as an over­all net pos­i­tive.”

Trad­ing got off to a down­beat start Tuesday as in­vestors weighed the lat­est batch of com­pany earn­ings news. But the market livened up around mid­morn­ing when the Con­fer­ence Board said its con­sumer con­fi­dence in­dex rose this month to its high­est level in more than 16 years. The in­dex mea­sures both con­sumers’ as­sess­ment of cur­rent con­di­tions and their ex­pec­ta­tions for the fu­ture. Both im­proved this month.

Traders also got some en­cour­age­ment from the lat­est Stan­dard & Poor’s CoreLogic Case-Shiller home price in­dex, which showed that U.S. home prices rose at the fastest pace in more than two years in Jan­uary.

Mort­gage rates are ris­ing, but that’s not ex­pected to af­fect home sales yet be­cause hir­ing is still strong, rates are low and there aren’t a lot of homes on the market. That’s a pos­i­tive com­bi­na­tion for home­builders, many of which have seen their stocks move sharply higher this year. Beazer Homes USA notched the big­gest gain among builders Tuesday, adding 38 cents, or 3.3 per­cent, to $12.06. The stock re­mains down 9.3 per­cent this year.

Sev­eral com­pa­nies re­ported im­proved quar­terly re­sults or out­looks, which also helped put traders in a buy­ing mood.

Dar­den Restau­rants jumped 9.3 per­cent af­ter the owner of Olive Gar­den re­ported strong quar­terly re­sults and said it will buy the Ched­dar’s Scratch Kitchen chain for $780 mil­lion. Ched­dar has 165 lo­ca­tions in 28 states. Dar­den was the big­gest gainer in the S&P 500, ris­ing $7.04 to $82.62.

Red Hat climbed 5.2 per­cent af­ter the open-source soft­ware com­pany re­ported strong sales and solid guid­ance for the cur­rent quar­ter. The stock added $4.28 to $86.48.

Car­ni­val rose 0.7 per­cent af­ter the cruise line op­er­a­tor served up solid first-quar­ter re­sults and a bet­ter-than-ex­pected es­ti­mate for the sec­ond quar­ter. The stock, which closed at an all-time high on Mon­day, gained an­other 39 cents to $59.26.

Gen­eral Mo­tors rose 2.4 per­cent af­ter its board voted to re­ject a pro­posal from in­vestor David Ein­horn to split the au­tomaker’s stock into two classes. GM shares picked up 85 cents to $35.56.

GENE J. PUSKAR / AS­SO­CI­ATED PRESS

U.S. stock in­dexes made sharp gains Tuesday af­ter the Con­fer­ence Board said that its con­sumer con­fi­dence in­dex rose this month to its high­est level in more than 16 years.

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