Stocks rallied in late-session trading Tuesday to finish modestly higher, on rising volume. Equities were able to shake off early weakness caused by a dip in consumer confidence and some negative comments on chip makers ahead of a mid-quarter update from Intel (INTC).
The Dow Jones industrial average added 51.4 points, or 0.51%, to 10,173.92. The broader Standard & Poor's 500 index rose 5.09 points, or 0.46%, to 1,104.24. The tech-heavy Nasdaq composite index gained 1.61 points, or 0.09%, to 1,838.1.
Portfolio adjustments related to the end of the month may have spurred some buying, notes Standard & Poor's MarketScope.
Intel continued on a second straight session of losses ahead of an update on its third quarter Thursday. Several analysts made cautious statements on the chip sector. Merrill Lynch said it remained cautious on the stock.
J.P. Morgan Securities cautioned that third quarter revenue at semiconductor makers Xilinx (XLNX) and Altera (ALTR )may come in on the low end. Sanford Bernstein cut third-quarter earnings and revenue forecasts for Texas Instruments (TXN) due to softening demand.
Trading promises to be light over the rest of the week, as many traders are on vacation ahead of the Labor Day weekend, and others based in New York keep clear of the Republican National Convention.
In earnings news, grocery chain Albertson's (ABS) reported a 54% decline in earnings in its fiscal second quarter. Sales at stores open a year a fell 1.5%. An acquisition boosted sales by 13% to $10.2 billion.
In merger news, Swiss banking giant UBS AG (UBS) said it will buy the capital markets division of discount brokerage house Charles Schwab (SCH) for $265 million, in an effort to become one of the top traders on the Nasdaq.
Economic data Tuesday were weaker than expected. The latest update on Chicago PMI, a gauge of manufacturing health, came in at 57.3 in August, compared with 64.7 in July. Economists had expected the index to post a reading of 60.
The Conference Board's August update on consumer confidence fell more than expected to 98.2, down from July's 105.7.
Oil worries were on the backburner Tuesday. Crude oil futures closed at just above $42 per barrel Tuesday despite pipeline sabotage in Iraq that has delayed exports. Prices are down about 14% from all-time record levels reached just a few weeks ago.
The major economic highlight of the week -- the August jobs report -- is due Friday. Economists expect the unemployment rate to be 5.5%. Meantime, weekly initial jobless claims arrive Thursday, along with updates on factory orders and inventories for July.
This week's earnings calendar includes quarterly updates from Bayer (BAY), Veritas DGC (VTS), and Del Monte Foods (DLM).
U.S. Treasuries climbed in price following reports of declines in gauges of manufacturing and consumer confidence. The yield on the benchmark 10-year note fell to 4.13%.
Still, there is little incentive for market players to make big bets ahead of the crucial jobs data, according to Action Economics, an economic research outfit.
European stock markets finished lower Tuesday amid disappointing U.S. economic data. The Financial Times-Stock Exchange 100 index in London lost 30.8 points, or 0.69%, to 4,459.3, with package firm Bunzl and airline British Airways leading losses. Germany's DAX index was down 53.64 points, or 1.4%, to 3,785.21. In Paris, the CAC 40 index was off 42.43 points, or 1.17%, to 3,594.28.
Asian markets finished down. Japan's Nikkei 225 index lost 102.74 points, or 0.92%, to close at 11,081.79, amid data showing that Japanese industrial production was flat in July. In Hong Kong, the Hang Seng index fell 27.5 points, or 0.21%, to close at 12,850.28.