New York: US stocks rallied on Tuesday, led by the tech, industrial and materials sectors, driving the Dow and the S&P 500 to 18-month highs.
Signs of improved demand in the semiconductor industry and a broker’s positive commentary on Caterpillar lifted blue chips, while tech bellwethers Apple and Cisco hit 52-week highs, indicating increased optimism among investors. Kraft, a Dow component, also hit a 52-week high.
Caterpillar Inc led the Dow industrials higher after Wells Fargo raised price targets on the company’s stock on expectations for strong longer-term growth. The stock climbed 4.1% to $62.41.
“Industrials have been among the best performers so far this year, so they’re getting a lot of the momentum money,” said John Massey, portfolio manager at SunAmerica Asset Management in Jersey City, New Jersey. “I think it’s clear we’re on an upward path.”
The S&P industrials sector was the S&P 500’s best-performing sector, with the S&P materials sector also lending support. Both indexes ended slightly above 1%.
Semiconductor stocks were also strong performers, lifting the Nasdaq. The Philadelphia semiconductor index rose 2.3%, while Intel Corp gained 1.9% to $22.67. Integrated Silicon Solution Inc surged 14.6% to $8.58 a day after it raised its second-quarter revenue and earnings outlook.
According to Stifel Nicolaus, which cited a media report, Taiwan Semiconductor Manufacturing forecast full-year revenue growth of 22%, compared with a previous expectation of 18%. The company’s U.S.-listed stock rose 0.9% to $10.27 on the New York Stock Exchange.
The Dow Jones industrial average rose 102.94 points, or 0.95%, to 10,888.83. The Standard & Poor’s 500 Index gained 8.36 points, or 0.72%, to 1,174.17. The Nasdaq Composite Index shot up 19.84 points, or 0.83%, to 2,415.24.
The Dow chalked up its 10th day of gains out of the past 11 sessions.
The Nasdaq Composite Index ended at its highest level since 18 August, 2008, or about a month before Lehman Brothers collapsed during the credit crisis.
After the closing bell, design software maker Adobe Systems gained 5.1% to $37 in extended trading after reporting an adjusted first-quarter profit that beat expectations. It also posted revenue above consensus.
On the downside, Jabil Circuit sank 5.5% to $17.34 after reporting its second-quarter results.
During the regular session, the US-listed shares of Brazilian mining giant Vale rose 5.1% to $31.57 after the company on Tuesday implemented a more flexible pricing system for iron ore. Brazilian business daily Valor Economico reported that Vale was boosting iron prices by 114% in 2010.
Among US metal companies, US Steel Corp gained 4.9% to $63.32.
Earlier in the session, Wall Street got a hint of stabilization in the US housing sector.
Existing home sales fell to an annual rate of 5.02 million units in February, the National Association of Realtors said. The decline was less than forecast, but highlighted the fragility of a housing recovery.
“It’s incremental good news that it was better than expected, but given the huge overhang of inventory, it’s clear that housing will remain a troubled sector for awhile,” said Jack Ablin, chief investment officer of Harris Private Bank in Chicago.
Builder KB Home dropped 1.7% to $17.15 after posting a wider-than-expected quarterly loss.
Healthcare stocks lagged, giving back some of Monday’s gains after US President Barack Obama signed the landmark healthcare reform bill into law on Tuesday.
The Morgan Stanley Healthcare Payor index dropped 0.3% and Cigna Corp fell 0.9% to $36.94.
US-listed shares of Baidu Inc jumped 2.6% to $594.88 after rival Google Inc shut down its mainland China portal and began rerouting searches to its Hong Kong operation. Google shares slid 1.5% to $549.
About 8.03 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year’s estimated daily average of 9.65 billion.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of more than 2 to 1. On the Nasdaq, roughly two stocks rose for every one that fell.