US stock indexes close higher as consumer confidence grows
Banks and other financial companies led US stock indexes sharply higher on Tuesday, breaking 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 US 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," Mr Kinahan said. "That's all the market is really hanging its hat on."
The Dow rose 150.52 points, or 0.7%, 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%, to 2,358.57. The Nasdaq composite index gained 34.77 points, or 0.6%, to 5,875.14.
Bond prices edged lower. The 10-year Treasury yield rose to 2.42% from 2.38%.
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 against 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.
Trading got off to a downbeat start on Tuesday as investors weighed the latest batch of company earnings news, but the market livened up around mid-morning when the Conference Board said its consumer confidence index rose this month to its highest level in more than 16 years.
The index measures 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 US home prices rose at the fastest pace in more than two years in January.
Mortgage rates are rising, but that is not expected to affect home sales yet because hiring is still strong, rates are low and there are not a lot of homes on the market.
That is 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%, to 12.06 dollars. The stock remains down 9.3% this year.
Several companies reported improved quarterly results or outlooks, which also helped put traders in a buying mood.
Darden Restaurants jumped 9.3 % 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% after the open-source software company reported strong sales and solid guidance for the current quarter. The stock added 4.28 dollars to 86.48 dollars.
Carnival rose 0.7% 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 dollars.
General Motors rose 2.4% after its board voted to reject a proposal from investor David Einhorn to split stock into two classes. GM shares picked up 85 cents to 35.56 dollars.
Several major stock indexes overseas closed higher.
In Europe, Germany's DAX gained 1.3%, while France's CAC 40 rose 0.6%. The FTSE 100 index of leading British shares added 0.7%.
In Asia, Tokyo's Nikkei 225 gained 1.1%, Hong Kong's Hang Seng added 0.5%, and Seoul's Kospi rose 0.3%.
The euro weakened to 1.0808 dollars from 1.0868 dollars, while the dollar strengthened to 111.09 yen from 110.57 yen.
Benchmark US crude rose 64 cents, or 1.3%, to close at 48.37 dollars per barrel in New York. Brent crude, used to price international oils, climbed 58 cents, or 1.1%, to close at 51.33 dollars a barrel in London.
Natural gas added 4 cents to 3.10 dollars per 1,000 cubic feet, wholesale petrol rose 2 cents to 1.64 dollars per gallon and heating oil gained a penny to 1.52 dollars per gallon.
In metals trading, the price of gold slipped 10 cents to settle at 1,255.6 dollars an ounce, silver rose 14 cents to 18.25 dollars per ounce, and copper added 4 cents to 2.68 dollars per pound.