By Anora Mahmudova and Barbara Kollmeyer, MarketWatch Dow scores
32nd record close of 2014
NEW YORK (MarketWatch) -- U.S. stocks closed higher on Tuesday,
led by energy stocks as they shrugged off a decline in crude oil
futures to rally back from their prior-day drubbing.
Sentiment was buoyed by news of two big M&A deals. Japan's
Otsuka Pharmaceuticals announced it will buy California-based
Avanir Pharmaceuticals(AVNR) in a deal valued at $3.5 billion. The
news sent Avanir shares up 12.8%.
Cypress Semiconductor Corp.(CY) and Spansion Inc. (CODE) agreed
to merge in a deal valued at $1.6 billion, pushing Spansion shares
up 21.9% and Cypress Semi shares up 14.3%.
The S&P 500 and Dow Jones Industrial Average scored their
best one-day percentage gains in about a month, while the blue-chip
index recorded its 32nd record close this year.
The Dow Jones Industrials Average (DJI) rose 102.75 points, or
0.6%, to 17,879.55.
The S&P 500 (SPX) gained 13.11 points, or 0.6%, to 2,066.55,
with the health-care sector stocks joining energy to lead gains.
Financials sector stocks also rallied, while telecoms, the only
laggard on Tuesday, sold off. It was the best gain for the
benchmark index since Oct 31.
The Nasdaq Composite (RIXF) ended the day up 28.46 points, or
0.6%, to 4,755.81, while Russell 2000 (RUT) turned positive for the
year again after gaining 13 points, or 1.1% to 1,167.08.
November car and light truck sales were second-highest in eight
years, according to figures from Autodata. Sales rose to a
seasonally adjusted annual rate of 17.2 million, up from 16.5
million in October and the best level since August. Shares in
General Motors Co.(GM.XX) and Ford Motor Co.(F) rose 1% and 0.8%
respectively.
In economic news, construction spending data, released Tuesday
morning, were up by 1.1% in October to a seasonally adjusted annual
rate of $971 million, much higher than expected by economists
polled by MarketWatch.
Stanley Fisher, vice chairman of the Federal Reserve, speaking
at The Wall Street Journal CEO Council annual meeting in
Washington, D.C., said continued labor market improvement and "some
signs" that inflation is beginning to stir would be enough for the
U.S. central bank to start to raise interest rates. If inflation
continues to move lower, the Fed will have to take that into
account, Fischer said.
Commodities volatile: Oil and precious metals gave up gains
posted in the prior session. After rising more than 4% on Monday,
January crude prices(CLF5) ended down more than 2%. Opinion: OPEC
cannot outlast the U.S. on oil prices
Gold prices also gave back some of Monday's rally, with February
futures(GCG5) off 1.6% and the precious metal falling below $1,200
an ounce level. What silver's biggest move in two years means
Investment banks continued to roll out their predictions for
2015. Citigroup is expecting the S&P 500 to return 8.5% by the
end of 2015, and expects Japan and emerging-market stocks to
outperform. That prediction is in line with that of Dan Greenhaus,
strategist at BTIG, who said the main reason for his own muted
expectations is that the first rate hike by the Federal Reserve --
expected next year -- will likely weigh on stocks. Fed to stay
aggressive in 2015 as it battles 'lowflation'
Stocks in focus:Biogen Idec Inc. (BIIB) jumped 6.4% after the
biotech company said it will move directly to Phase III from Phase
I testing for an Alzheimer's treatment after the drug had a
significant effect on cognition among patients included in the
initial study.
TripAdvisor Inc. (TRIP) was the biggest S&P 500 gainer,
adding 7.9%. The stock has gained in five out of the past six
sessions.
Shares of Royal Caribbean Cruises Ltd.(RCL) jumped 6.2% after
the stock was added to the S&P 500.
Overseas markets: The FTSE 100 index snapped a four-day losing
streak, adding 1.3% as oil and mining stocks rebounded from
Monday's selloff. Energy stocks also fueled gains for Europe , and
there was strength across Asia. The Shanghai Composite rallied 3%,
led by brokerages and banks. The People's Bank of China held back
from draining funds from the banking system on Tuesday, which
analysts said has triggered speculation that a cut in reserve
requirements could come soon.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires