Stocks ended with solid gains Tuesday, with blue chips reaching theirhighest levels since 2001 amid moderate trading volumes, strong quarterly earnings results from investment banks, and an uptick in pharma stocks. Bets on the market's strength in the second half of December largely drove direction Tuesday, says S&P MarketScope.
The Dow Jones industrial average ended up 97.83 points, or 0.92%, to 10,759.43. The broader Standard & Poor's 500 index gained 10.78 points, or 0.90%, to 1,205.43. The Nasdaq composite index rose 23.06 points, or 1.08%, to 2,150.91.
The markets will be closed this Friday, December 24, in observance of the Christmas holiday.
Looking ahead, Wednesday's economic calander brings final GDP figures from the Commerce Dept. at 8:30 a.m. ET, and the Energy Information Administration (EIA)'s weekly status report on petroleum inventories.
In earnings news, blue chips ConAgra (CAG) and Micron Technology (MU) are set to release quarterly results Wednesday.
On Tuesday, crude oil eased to a $45.75 per barrel closing level, after ranging between $45.31 and $46.15, in thin trading conditions with dealings geared towards yearend adjustments.
Tuesday's main economic news consisted of a series of weekly sales figures: Visa-USA, which indicated that sales rose 15.6% over the past week and are currently tracking 18.4% above last year's holiday season; The ICSC-UBS chain store sales index, which jumped 1.6% for the week ended Dec. 18, after a 1.2% increase the week before; and finally, Redbook weekly sales reported a rise of 2.1%. Action Economics but caution that these same-store sales measures "under-count" total sales, because they leave out sales at new stores.
In earnings news,Morgan Stanley (MWO) reported earnings of $1.09 per share, 8 cents better than consensus estimates, while Bear Stearns (BSC) posted earnings of $2.61 per share, beating analysts' expectations by $0.47. General Mills (GIS) also beat analysts' expectations with quarterly earnings results of 99 cents per share.
Tuesday's session saw broad strength in IT stocks. Interactive (IACI) announced Tuesday that it will split off its Internet travel-related businesses as Expedia, including Hotwire and Hotels.com. Interative's stock was up 8%.
Intel (INTC) gained almost 4% on an analyst upgrade, but semiconductor stocks took a hit. Silicon Storage Technology (SSTI) fell 15% on reports that it cut its fourth-quarter financial targets due to weak demand and falling prices. ATI Technologies (ATYT) also dropped over 5% after its fiscal first-quarter earnings and revenue fell short of analysts' forecasts.
Pharma issues recovered losses incurred Monday and last Friday, and despite another FDA warning of increased heart attack risk connected to the over-the-counter painkiller naproxen, sold as a generic drug by aspirin maker Bayer (BAY), health care overall showed resilience and held steady in positive territory. Pfizer (PFE) rebounded slightly from earlier Celebrex problems, and both stocks were up at the market's close.
Treasuries showed little reaction Tuesday as stocks hit session highs, in a choppy day of trading with little guiding economic news. S&P MarketScope says the market is still seeing end-of-year window dressing in very thin trading conditions. The benchmark 10-year yield ended at 4.17%.
In currencies, the dollar ended higher against most currencies in thin, yearend portfolio adjusting trading. For the most part, says Action Economics, Tuesday was a listless day for the North American foreign exchange market, as a general lack of interest kept most major currency pairings inside tight and choppy trading bands.
European markets ended higher Tuesday.
The Financial Times-Stock Exchange 100 index in London finished up 1.90 points, or 0.04%, to 4,733.00, showing little reaction to a report that U.K. housing price index fell to its lowest level in 12 years.
Germany's DAX index ended with a gain of 2.84 points, or 0.07%, to 4,214.39, after two of Germany's six leading economic institutes cut their growth forecasts for Europe's largest economy next year. Finance Minister Eichel criticized Bundesbank's decision to sell limited amount of gold reserves Tuesday.
In Paris, The CAC 40 ended up 5.99 points, or 0.16%, to 3,770.03, even though November French consumer spending spurted more than expected 1.5% -- the biggest gain in 5 months -- after rising 0.6% in October.
Asian markets ended mixed on Tuesday, with Japan's Nikkei index climbing 0.20% to 11,125.92.
In Hong Kong, the Hang Seng index ended down 33.25 points, or 0.23%, to 14,180.79.