By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
Staples, Office Depot surge on merger news
NEW YORK (MarketWatch) -- U.S. stocks rallied into the close for
the second-straight session on Tuesday, sending Dow industrials
rocketing more than 300 points, as equities kept pace with surging
crude-oil prices.
A 7% jump in crude oil futures delivered a fillip to energy
shares, while upbeat monthly U.S. car sales, merger activity ad
positive developments in Greece's debt negotiations also boosted
confidence.
The S&P 500 (SPX) closed 29.15 points, or 1.4%, higher at
2,050, with broad-based gains across all sectors. But energy stocks
were the stars in Tuesdays trading, boosted by a big jump in oil
prices. The mood on Wall Street was optimistic with cyclical stocks
outperforming defensive sectors. Small-cap stocks rallied, with
Russell 2,000 (RUT) gaining 1.8% to 1,196.97.
The Dow Jones Industrial Average (DJI) gained 305.36 points, or
1.8%, to 17,666.40, with all of its 30 members ending in the green.
The move represented the biggest gain in more than three weeks for
the blue-chip index, and marked the sixth consecutive session of
triple-digit moves.
The Nasdaq Composite (RIXF) ended the day up 51.05 points, or
1.1%, at 4,727.74.
Peter Cardillo, chief market economist at Rockwell Global
Capital, said today's trading was very much as 'risk-on' trade,
when investors feel bullish about equities and other risky assets
and shed haven assets, such as Treasurys and gold.
"Over the past two days we've had good news from Greece and it
seems like oil found a floor and stopped falling. With the majority
of earnings beating expectations, it is not surprising to see
stocks rallying," Cardillo said.
"The S&P 500 held above technical levels and we find that
significant. We expect this rally to be sustained in February with
somewhat diminished volatility," he added.
Martin Leclerc, chief investment officer and portfolio manager
at Barrack Yard Advisors, attributed volatility that has whipsawed
stocks to investors trying to figure out whether to be risky or
risk averse in their investing strategies.
"While indexes are relatively robust, individual stocks are not
doing as well. There are more stocks that are down 10% than up 10%,
for example. But that does not mean this bull market is about to
end," Leclerc said.
"We expect markets to get more 'speculatively' higher before
seeing a big correction, given there is still a lot of central bank
liquidity," he added.
Global central-bank easing was a theme for Tuesday. Australia
stocks hit a seven-year high after the Reserve Bank of Australia
surprised markets by cutting rates to a record low.
"With yet another central bank cutting rates, the case for
additional upside in equities remains intact," said Brenda Kelly,
chief market strategist at IG, in emailed comments. "Add to this
the bounce in oil prices and we have some additional enthusiasm for
risk assets."
Late news that Greece has offered a debt-swap plan in a bid to
end a standoff with its European partners boosted European
equities. The Athens Composite Index shot up nearly 9%, driving a
1.2% gain for the Stoxx Europe 600 index .
Oil prices surged on Tuesday, settling at their highest level
this year. Sweet crude futures for delivery in March (CLH5) settled
up $3.48, or 7%, at $53.05. The last time oil settled higher was
$53.27 on Dec. 31.
Meanwhile, heightened risk-appetite sent Treasurys lower, with
the yield on the 10-year note , which moves inversely to the price,
jumping 11 basis point to 1.79%. Investors also sold off the yellow
metal, with gold prices (GCH5) down 1.2% to $1,261.6 a troy
ounce.
Market reaction to weaker-than-expected factory orders was
muted, as markets shrugged off a report indicating that
manufacturing activity had slowed down in December. Factory orders
fell 3.4% in December in fifth straight decline.
Aetna, UPS and automobile sales: Chrysler, Ford Motor Co. ,
General Motors Co. and Nissan Motor Co. all posted double-digit
increases for January car sales, as lower oil prices spurred demand
for sport-utility vehicles and trucks. Shares of both Ford and GM
rose 2.5% and 2.6% respectively.
AutoNation Inc. (AN)(AN) surged 6.5% after sales climbed double
digits.
Shares of Staples Inc.(SPLS) and Office Depot Inc.(ODP) shot up
11% and 22%, respectively, after a Wall Street Journal report that
the two are in advanced talks to merge, citing people characterized
as close to the matter.
Shares of Lending Club Corp. (LC) climbed 5.3% after the
announcement of a deal with Alibaba Group Holding Ltd.(TICKER:BABA)
to provide sales financing to small businesses buying from Chinese
suppliers.
For more on notable movers, read our regular Movers &
Shakers column.
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