The Dow Jones industrial average added 159.19 points, or 1.60%, to 10,117.62. The Nasdaq composite index gained 41.67 points, or 2.17%, to 1,964.65. The broader Standard & Poor's 500-stock index was up 17.67 points, or 1.61%, at 1,113.08.
Looking ahead to Wednesday, a few companies are set to report earnings as the quarterly earnings season nears an end. Among them are auto retailer Autozone (AZO
) and Veritas (VTS
) , a seismic technology company.
On the economic data front, a report on Tuesday is expected to show that orders for big ticket items, or durable goods, slipped 0.8% in April versus a 5% jump in Marhc. Meantime, the sales of new homes in April is forecast to have slipped to a 1.15 million annualized pace from a 1.228 million pace in the previous month.
One factor helping drive stocks higher on Tuesday was a drop in the price of crude oil after closing at a record high Monday. Higher oil prices can create inflation, which could push the U.S. central bank to raise interest rates in June.
Two separate economic reports mostly painted a picture of a strengthening economy. Existing home sales rose 2.5% in April to 6.64 million annualized pace, topping expectations. According to Informal Global Markets, "the figure confirms a still-solid housing market as potential homeowners rush to enter the market before rates increase, while mortgage applications remain strong."
And the Conference Board's consumer conference index came in at 93.2 for May--a bit below expectations--versus a 93.0 reading for April, Informa says.
But concerns about the high price of crude remain.
Investors were nervous after OPEC officials were highly critical of a Saudi proposal to expand oil production to help reduce prices and meet higher global demand, according to Informa Global Markets.
In earnings news, doughnut retailer Krispy Kreme (KKD
) posted its first quarterly net loss since its IPO four years ago. The chain said it was scaling back the number of planned new stores amid slacker sales due in part to the trend in low-carb diets.
Meantime, Medtronic (MDT
), the world's top medical device maker, posted higher quarterly earnings thanks to greater sales in all of its major product lines.
), the housewares retailer, reported higher quarterly profit thanks to lower costs and improved merchandise selections at its Pottery Barn chain.
Food giant Campbell Soup (CPB
) reported 10% higher profit in its third fiscal quarter thanks to the currency exchange rates, which offset more promotional expenses and weaker sales.
), which makes networking software and update services for Linux, cut its quarterly loss in half over last year by increasing revenue.
In New York Stock Exchange news, Richard A. Grasso, the Big Board's former head, said Tuesday he would contest New York State Attorney General Eliot Spitzer's lawsuit over his $187.5 million compensation package.
Treasury prices closed mixed after stocks strengthened, with the benchmark 10-year note yielding 4.73% at the close. Earlier, Treasuries had been higher in price as traders focused on the "jobs hard to find" component of the strong consumer confidence report. The strength in home sales was largely ignored, says Informa Global Markets.
European stock markets closed lower on Tuesday. London's FTSE 100 index was off 10.90 points, or 0.25%, to 4,418 following reports that U.K. first quarter business investment rose 0.3% while car production fell 1.3% in the three months to April and that manufacturing pay settlements hit the highest level in three years. Vodafone was lower after reporting higher earning and the company announced a buyout of Vodafone Japan.
Germany's DAX index was off 39.77 points, or 1.03%, to 3,828.27 as German Ifo business climate index eased to 96.1 in May from 96.3 in April. Bayer and BASF were lower on worries earnings could suffer from higher oil prices. CDV Software Entertainment was lower after saying first quarter sales fell 24%.
France's CAC-40 index was down 18.29 points, or 0.50% to 3,610.53 on worries about higher oil prices and a report that French consumer prices rose 0.3% in April. Axa, France Telecom, and Alcatel were lower while Carrefour and Casino were higher following a Financial Times report that Wal-Mart (WMT
) will consider making large acquisitions in Europe.
Asian markets finished mixed. In Japan, the Nikkei index lost 138.71 points, or 1.25%, to close at 10,962.93 with big banks sliding after they gave disappointing outlooks for this year, according to S&P Marketscope. UFJ Holdings fell after the bank posted an annual loss due to write-offs of bad loans, but the bank expects to turn profitable this year. Japan's three other top banks trended lower despite posting an annual profit as they forecast flat to lower earnings for this business year. Softbank shares bucked the downtrend after the company said it was considering buying into Japan Telecom, which is controlled by U.S. buyout firm Ripplewood Holdings LLC. Nippon Oil rose along with its peers after a local newspaper reported Japanese oil wholesalers would soon up gasoline prices.
In Hong Kong, the Hang Seng index was up 29.59 points, 0.25%, to close at 11,692.937 In Hong Kong, the benchmark Hang Seng Index fell 1.0% to 11,549.21 at midday close as investors stayed on the sidelines ahead of the Buddha's Birthday holiday Wednesday. Property issues trended lower on profit-taking, ahead of a public land auction which is to be held later this afternoon, according to S&P Marketscope. In Taiwan, the TAIEX rose 0.27% to 5958.38 on the back of gains in techs, plastics, chemical names and paper stocks.