U.S. stocks, up for most of the day, scored big gains Tuesday after some seesaw trading in the session's final hour.
Equities received a boost from news that the Conference Board's May consumer confidence index shot up to 54.9 from 40.8 in April.
Meanwhile, a report released Monday showed a record drop in U.S. home prices.
The market also weighed news that President Barack Obama had named U.S. appeals court Judge Sonia Sotomayor of New York as his pick to replace
retiring justice David Souter on the U.S. Supreme Court
Equity index futures were lower earlier as North Korea's nuclear testing rattled investors.
On Tuesday, the 30-stock Dow Jones industrial average finished with a gain of 196.17 points, or 2.37%, at 8,473.49. The large-cap Standard & Poor's 500 index added 23.33 points, or 2.63%, to 910.33. The tech-heavy Nasdaq composite index climbed 58.42 points, or 3.45%, to 1,750.43.
Many think the worst of the recession is over, notes S&P MarketScope, but market players are uncertain about the speed of recovery.
Following the U.S. market's long holiday weekend, North Korea reportedly defied the United Nations by firing two short-range missiles. The country on Monday detonated a nuclear bomb underground, a test that the U.N. Security Council condemned as a violation of international law.
Investors were already nervous about the sustainability of the stock market's massive two-month rally, given the uncertainty surrounding the global economy. The political tension between North Korea and the other countries, including the United States, South Korea and China, gave investors around the world another reason to trade with caution.
Standard & Poor's said Monday that the S&P/Case-Shiller U.S. National Home Price index continues to set record declines, a trend that began in late 2007 and prevailed throughout 2008. The index recorded a 19.1% decline in the first quarter of 2009 vs. the year-earlier period, the largest decline in the 21-year history of the series.
The S&P/Case-Shiller 10-City composite and 20-City composite home price indexes recorded annual declines of 18.6% and 18.7%, respectively -- slightly improved from the returns reported in February.
U.S. consumer confidence soared to 54.9 in May from 40.8 (was 39.2) in April, 26.9 in March, and an all-time low of 25.3 in February. Future expectations led the charge, with a surge to 72.3 in May from 51.0 (was 49.5), to also leave a third monthly gain from a 27.3 all-time low in February. The present conditions component rose only modestly, to 28.9 from 25.5 (was 23.7) in April, and a cycle-low of 21.9 in March.
The U.S. Richmond Fed manufacturing index rose to 4.0 in May from -9 in April, a third straight monthly improvement.
Traders were hopeful Wednesday's reports on existing home sales and the FHFA home price index will show some improvement in the battered housing market.
The Wall Street Journal reported the United Auto Workers union told its officials it will own 17.5% of GM once the car maker restructures as part of GM's obligation to fund retiree health care, a person familiar with the matter said. Under the deal, which was agreed to last week and is set for a UAW vote in coming days, GM will place $10 billion of assets into a retiree health-care fund on Jan. 1, 2010. The UAW also will receive a new note, payable in cash, for
Magna International (MGA) confirmed that, with Sberbank Rossii, it has submitted a non-binding offer for GM's Opel unit. The offer contemplates a total investment by Magna and Sberbank of €700 million, a portion of which would be guaranteed by the German government. Under the offer, proposed equity interests in Opel would be: 35% for GM, 35% for Sberbank, 20% for Magna, with 10% held by Opel employees.
Separately, newswires reported that Germany will decide on a preferred bidder for Opel by middle of the week, after holding a final round of talks with suitors Fiat, Magna, and RHJ.
Government bonds were lower in price Tuesday despite a strong $40 billion 2-year Treasury note sale.
The dollar was flat vs. other major currencies, while gold prices fell. Oil futures rose in a rebound from an early slide.
Overseas, Japan's Nikkei stock average fell 0.4%. Britain's FTSE 100 finished higher by 1.1%, Germany's DAX index gained 1.4%, and France's CAC-40 rose 1.1%.