Stocks rallied Tuesday as the euro gained against the dollar after a number of successful European debt auctions eased investor concerns about the euro zone's solvency crisis. Techs and industrials led the advance.
The Dow Jones Industrial Average gained 213.88, or 2.1 percent, to close at 10,404.77. All 30 components were higher, led by Microsoft, American Express and Boeing .
The S&P 500 rose 2.4 percent to trade above its 200-day moving average of 1,108.26 for the first time since May. The tech-heavy Nasdaq gained 2.8 percent. And the CBOE volatility index, widely considered the best gauge of fear in the market, was near 25 at the closing bell.
The euro rose against the dollar as strong demand for government debt from several European countries offset worries about the debt crisis after Moody's downgraded Greece's credit rating to junk status on Monday.
“Most of the downtrend in the euro is done,” said Michael Cohn, chief investment strategist at Global Arena Investment Management. “We’ll probably have one more downdraft for the euro by August to around $1.15, but that’s it.”
Industrials and techs, sectors with some of the biggest exposure to Europe, were among the biggest gainers. Energy also advanced as oil rose nearly $2, settling at $76.94 a barrel.
BP shares rose but the company remained under intense political pressure amid a congressional hearing on the spill. President Obama will give a primetime speech on the oil spill tonight and will meet with Hayward tomorrow. Hayward will testify at that congressional hearing on Thursday.
BP hired investment banksBlackstone Group, Goldman Sachs, and Credit Suisse as advisers, but did not elaborate on the purpose of the advice. And Fitch cut the oil major's debt ratingto 'BBB' from 'AA' citing the risk of higher near-term costs, but later came back as investors shrugged off the move, since the oil company is still rated in investment grade territory.
Shares of other deepwater drillers such as Transocean and Diamond Offshore also advanced.
Chips continued to rally after two Tawainese chip makers reported increased global demand, with Micron Technology and Marvell up more than 8 percent. The Philadelphia Stock Exchange semiconductor index gained more than 5 percent.
Research In Motion rose over 5 percent following news that the BlackBerry maker is working on touch-screen technology to compete with the iPhone.
And Apple rose after the company launched a new version of the Mac mini, its lowest priced computer, which will start at $699.
Sprint shares rose amid news that the telecommunications firm will try to take control of wireless service provider Clearwire
Banks were mostly higher asHouse and Senate conferees resume work on the financial regulation reform bill, trying to iron out differences between the two versions.
SunTrust shares rose after Rochdale Securities analyst Dick Bove raised the stock
The early signs on earnings season are encouraging.
“We’ve seen earnings revisions moving up in recent weeks," Jeffrey Kleintop, chief market strategist at LPL Financial told CNBC.
Kleintop said he favors the small-cap US stocks and advised investors to look into the business spending-oriented sectors over the consumer-oriented ones. “Materials, industrials and technology look to be the winners on the rebound.”
FedEx shares rose ahead of its the company's earnings report scheduled for tomorrow before the bell.
In the day's economic news, the Empire State manufacturing index continued to grow in Junealthough employment fell sharply. Separate reports showed import prices fell by the most in nearly a year last month and a gauge of homebuilder sentiment dropped to 17 in June from 22 in May as the first-time homebuyers' tax credit expired, the National Association of Home Builders reported.
Shares of major credit-card companies were higher, with Visa up more than 4 percent, after a report that credit-card delinquencies fell again in Mayas more consumers managed to pay their bills despite a sluggish economic recovery.
Best Buy shares skidded after the electronics retailer reported earnings that missed expectations as television prices fell sharply. Shares of rival GameStop also tumbled.
Major U.S. airline shares including Delta Airlines and American Airlines parent AMR rose as the carriers said current quarter unit revenue would rise, helped by recovering business, international traffic and rising fares.
Hershey slipped after the company announced plans to cut 500 to 600 jobs, or about 5 percent of its workforce.
Starbucks announced that it will now offer Wi-Fi in all of its stores using the AT&T network, a moved aimed at hitting back at big chains like McDonald's that are getting into the coffee business.
Shares of the CBOE exchange jumped more than 12 percent on their debut after pricing at $29, the top of the expected range, last night. It is the last major North American exchange to be publicly traded.
In mergers and acquisitions, News Corp offered to buy the 61 percent of satellite TV provider BSkyB that it doesn't already own for $11.5 billion, but its offer has been rejected, with BSkyB saying it significantly undervalues the company.
Volume was light, with less than 1.2 billion shares changing hands on the New York Stock Exchange. Advancers outpaced decliners, about 6 to 1.
Still to Come Week:
WEDNESDAY: Weekly mortgage apps; PPI; housing starts; industrial production; weekly oil inventories; Fed's Plosser speaks; Disney insider trader hearing; China trade hearing; Earnings from FedEx
THURSDAY: CPI; weekly jobless claims; current accounts; leading indicators; Philadelphia Fed survey; BP CEO testifies
FRIDAY: Quadruple witching; S&P indexes rebalanced
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