Financials companies led U.S. stock indexes higher in afternoon trading Tuesday as investors drew encouragement from new data showing strong gains in consumer confidence and U.S. home prices. Energy stocks also rose as crude oil prices headed higher. Health care and utilities lagged the broader market.
ON WALL STREET: At the close, the Standard & Poor’s 500 index was up nearly 17 points, about 0.7 percent, at 2,358.6.
The Dow Jones industrial average gained 150.5 points, about 0.7 percent, to 20,701.5. The Nasdaq composite added 34.8 points, about 0.6 percent, to 5,875.1.
ANALYST’S OPINION: “The market is sort of in a holding pattern waiting for additional clarity from the administration on corporate tax reform,” said analyst Nadia Lovell, U.S. equity strategist at J.P. Morgan Private Bank. “We do view the pivot away from health care reform on Friday as an overall net positive.”
ECONOMIC INDICATORS: The Conference Board said that its consumer confidence index rose this month to 125.6, its highest level in more than 16 years. Separately, the latest Standard & Poor’s CoreLogic Case-Shiller home price index showed that home prices rose at the fastest pace in more than two years in January. Mortgage rates are rising but that’s not expected to affect home sales yet because hiring is still strong, rates are low and there aren’t a lot of homes on the market.
STILL, INVESTORS WORRY: Worries that Washington may not be able to help businesses as much as once thought knocked stock indexes down hard early Monday, but they clawed back most of their losses and ended the day mixed. The S&P lost 0.1 percent to 2,341.59 for its seventh drop in the last eight sessions. The Dow sank 0.2 percent, to 20,550.98.
TRUMP SLUMP: Last week’s failure by Republicans to repeal the Affordable Care Act, which they have pledged to do for years, raised doubts that Washington can push through other promised changes to help businesses. Investors have been anticipating that President Donald Trump and the Republican-led Congress will cut taxes, loosen regulations for companies and institute other corporate-friendly policies.
ANALYST’S TAKE: “Markets appear reluctant to take the Trump disappointment too much further at this stage,” analyst Ric Spooner of CMC Markets said in a report. “With U.S. economic growth showing signs of improvement and the Fed clearly embarked on a monetary tightening cycle, the significant correction that has already occurred in bonds and the U.S. dollar may already reflect an adequate wind back of the market’s Trump exuberance.”
OIL PRICES: As markets closed, benchmark U.S. crude had gained 66 cents to $48.39 per barrel in electronic trading on the New York Mercantile Exchange. In London on the Intercontinental Exchange Europe, Brent crude, used to price international oils, was up 55 cents at $51.30 a barrel.
OIL WORRIES: Oil prices have sagged below $50 — a boon to importers but a blow to developing countries that rely on crude sales to pay for imports. Benchmark U.S. crude could fall to $40 per barrel before tight oil producers cut back and supply stops increasing, analyst Carl B. Weinberg of High-Frequency Economics said in a report. “Oil-producing emerging economies will earn less foreign currency,” said Weinberg. “This will impair their ability to import: World trade will resume its persistent decline.”
AMERICAN AIRLINES: American Airlines agreed to pay $200 million for a stake in China Southern Airlines, the biggest of China’s three major state-owned carriers, to gain better access to the country’s growing travel spending. China Southern said the two airlines will expand commercial cooperation, possibly in sales, airport facilities and code-sharing.