U.S. Stocks Show Strong Move Back To The Upside

After moving sharply lower in the previous session, stocks showed a strong move back to the upside during trading on Tuesday. The major averages all showed strong upward moves on the day.

The major averages pulled back off their highs going into the close but remained firmly positive. The Dow advanced 311.75 points or 0.9 percent to 34,314.67, the Nasdaq surged 178.35 points or 1.3 percent to 14,433.83 and the S&P 500 jumped 45.26 points or 1.1 percent to 4,345.72.

The rally on Wall Street came as traders looked to pick up stocks at reduced levels following the sell-off seen on Monday.

The tech-heavy Nasdaq ended yesterday’s session at its lowest closing level in over three months, while the S&P 500 dropped to a more than two-month closing low.

Concerns about inflation and the Federal Reserve tapering its asset purchases weighed on the markets along with an increase in treasury yields.

Adding to the positive sentiment, the Institute for Supply Management released a report showing activity in the U.S. service sector unexpectedly grew at a slightly faster pace in the month of September.

The ISM said its services PMI inched up to 61.9 in September from 61.7 in August, with a reading above 50 indicating growth in the service sector. Economists had expected the index to edge down to 60.0.

“The slight uptick in the rate of expansion in the month of September continued the current period of strong growth for the services sector,” said Anthony Nieves, Chair of the ISM Services Business Survey Committee.

He added, “However, ongoing challenges with labor resources, logistics, and materials are affecting the continuity of supply.”

A separate report released by the Commerce Department showed the U.S. trade deficit widened by much more than expected in the month of August.

The Commerce Department said the trade deficit widened to $73.3 billion from a revised $70.3 billion in July. Economists had expected the trade deficit to increase to $70.5 billion from the $70.1 billion originally reported for the previous month.

The wider trade deficit came as the value of imports jumped by 1.4 percent to $287.0 billion, while the value of exports rose by 0.5 percent to $213.7 billion.

Brokerage stocks showed a substantial move to the upside on the day, driving the NYSE Arca Broker/Dealer Index up by 2.2 percent.

Significant strength was also visible among transportation stocks, as reflected by the 1.8 percent gain posted by the Dow Jones Transportation Average.

Software, semiconductor and banking stocks also saw considerable strength on the day, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan’s Nikkei 225 Index tumbled by 2.2 percent, while South Korea’s Kospi slumped by 1.9 percent.

Meanwhile, the major European markets moved to the upside on the day. While the French CAC 40 Index surged up by 1.5 percent, the German DAX Index jumped by 1.1 percent and the U.K.’s FTSE 100 Index advanced by 0.9 percent.

In the bond market, treasuries moved notably lower over the course of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed by 4.8 basis points to 1.529 percent.

Looking Ahead

Trading on Wednesday may be impacted by reaction to payroll processor ADP’s report on private sector employment in the month of September.

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