By Anora Mahmudova and Wallace Witkowski, MarketWatch
Blue chips gain 200 points, new home sales surge in April
U.S. stocks surged Tuesday as a rally in financial and
technology shares underpinned a sharp, broad-based stock-market
advance.
The Dow Jones Industrial Average added 203 points, or 1.2%, to
17,696. Nearly all of the 30 of the blue-chip's components traded
higher, led by more than 2% gains in Microsoft Corp.(MSFT) and
Intel Corp.(INTC) and a strong showing from financial firms
American Express Co. (AXP), Visa Inc. (V), J.P. Morgan Chase &
Co.(JPM) and Goldman Sachs Group (GS).
The S&P 500 index jumped 27 points, or 1.3%, to 2,075 as all
10 of its main sectors traded in positive territory. Among the
S&P 500 shares, nearly a fifth were up more than 2%, another
40% were up more than 1%, while less than 10% were in negative
territory.
Meanwhile, the Nasdaq Composite Index surged 92 points, or 1.9%,
to 4,856.
Tuesday's rally comes on the heels of hawkish minutes from the
Federal Reserve's latest policy meeting and comments from several
officials that rate increases may come as soon as next month.
Wall Street is pricing in a 34% chance of a June hike and a 56%
chance of a July move, according to the CME Group's FedWatch tool
(http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html).
There's little rational backing for Tuesday's rally, said Peter
Boockvar, chief market analyst for The Lindsey Group, in an
interview. Catalysts, however, include the weak euro and its boost
to European stocks, and strong housing data following last week's
market selloff.
Indeed, the sale of new homes surged 16.6% in April,
representing the largest monthly jump in 24 years
(http://www.marketwatch.com/story/new-home-sales-roar-back-crushing-forecasts-with-a-619000-annual-pace-in-april-2016-05-24)--a
sign that builders are stepping up as demand for housing remains
robust.
Still, market watchers said the recent swings in the market are
a reflection of investor anxiety about the prospect of rate
hikes.
"We're still churning ourselves to death here," said Boockvar.
"With the tight trading range we're in, the market is bipolar day
to day." Over the past two months, the S&P 500 has traded
within a 90-point range, and is only up about 1%, with much of that
pegged to Tuesday's gains.
Technical analysts view the sustainability of this recent rally
as depending on stock indexes', like the S&P 500, ability to
trade above key levels.
"Today's big jump is purely a technical bounce and if [the
S&P 500 holds] above the 50-day moving average, which we just
crossed over, we might see some more upside in the market," said
Lance Roberts, chief investment strategist at Clarity Financial,
LLC.
Roberts said the big positive moves over the past few months
tended to be erased by equally big negative moves, while the market
is trapped in a range.
"The 2,040 seems to be a resistance level and breaking below
that would mean further weakness in the market. The path of least
resistance right now is a trend lower," Roberts said.
Companies news
Toll Brothers Inc. (TOL) posted quarterly profit and revenue
that topped expectations
(http://www.marketwatch.com/story/toll-brothers-profit-jumps-in-second-quarter-beating-views-2016-05-24).
Better-than-expected earnings and robust new home sales data sent
shares up 7.8%.
More broadly, home builders benefited from upbeat new-home sales
report. PulteGroup Inc.(PHM), Lennar Corp.(LEN) and D.R. Horton
Inc. (DHI) climbed more than 4%.
Best Buy Co. Inc. (BBY) quarterly results beat forecasts, but
the company's guidance disappointed
(http://www.marketwatch.com/story/best-buy-shares-sink-after-weak-guidance-2016-05-24)
and shares plunged 6.3%.
Herbalife Ltd.(HLF) shares rallied 4.6% following a report that
the company reached a settlement with federal regulators
(http://www.marketwatch.com/story/herbalife-said-to-reach-settlement-with-federal-regulators-ny-post-2016-05-24)
concerning allegations that it was a pyramid scheme.
Other markets
Oil futures
(http://www.marketwatch.com/story/oil-prices-stay-in-the-doldrums-on-supply-growth-concerns-2016-05-24)
traded modestly higher. European stocks
(http://www.marketwatch.com/story/european-stocks-turn-higher-led-by-gains-for-banks-2016-05-24)
advanced, led by gains for banks. Asian markets closed mostly down
(http://www.marketwatch.com/story/asia-stocks-retreat-on-weak-commodity-prices-uncertainty-over-fed-moves-2016-05-24),
with blame being assigned to weak commodity prices and uncertainty
over the timing of the next U.S. interest-rate increase. Gold
futures
(http://www.marketwatch.com/story/gold-tracks-5th-straight-loss-as-higher-rate-sentiment-holds-2016-05-24)
settled down 1.7% at $1,229.20 an ounce, and the ICE U.S. Dollar
Index gained.
Check out: This financial sector's boom in China could end with
a bust
(http://www.marketwatch.com/story/the-latest-scary-china-chart-this-financial-sectors-boom-could-end-with-a-bust-2016-05-24)
--Victor Reklaitis in London contributed to this article.
(END) Dow Jones Newswires
May 24, 2016 14:52 ET (18:52 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.