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Merger and acquisition activity and expectations that ECB will reduce key lending rates helped benchmarks end higher on Tuesday. Tuesday’s gains led the S&P 500 to a record high for the second straight session. The Nasdaq reached its highest level in almost eight weeks boosted primarily by gains in the technology sector. The day’s encouraging economic numbers on manufactured durable goods, improved consumer confidence and an increase in the leading measure of U.S. home prices also lifted investor sentiment. For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article
The Dow Jones Industrial Average (DJI) gained 0.4% to close Tuesday’s trading session at 16,675.50. The Standard & Poor 500 (S&P 500) went up 0.6% to finish at 1,911.91. The tech-laden Nasdaq Composite Index rose 1.2% to 4,237.07. The fear-gauge CBOE Volatility Index (VIX) advanced 1.3% to settle at 11.51. Total volume for the day was roughly 5.38 billion shares, lower than this month’s average of 5.80 billion. Advancers outpaced declining stocks on the NYSE. For 66% stocks that advanced, 30% declined.
European Central Bank President Mario Draghi’s comments on Memorial Day helped benchmarks open higher on Tuesday. He urged banks to be “particularly watchful” for any “pernicious negative spiral” of low inflation rate and weak lending rates derailing the eurozone’s recovery. His comments hinted that ECB might cut rates and provide more economic stimulus during next week’s policy meeting.
A new deal between The Hillshire Brands Company (NYSE:HSH) and Pilgrim's Pride Corporation (NASDAQ:PPC) also added to the bullish sentiment. Shares of Hillshire Brands surged 22.1% after Pilgrim's Pride agreed to buy Hillshire in an all-cash deal valued at $6.4 billion. The deal will help the world’s second-largest chicken processor to expand its business with Hillshire’s sausages and lunch meats. Shares of Pilgrim's Pride also increased 1.7%.
The tech-heavy Nasdaq was boosted by gains in technology stocks. Shares of Apple Inc. (NASDAQ:AAPL), the heaviest component in the Nasdaq, gained 1.9%. Shares of the iPhone and iPad maker touched the highest level since August 2012. Other key stocks from the sector such as Microsoft Corporation (NASDAQ:MSFT), Google Inc. (NASDAQ:GOOGL), QUALCOMM Incorporated (NASDAQ:QCOM) and Cisco Systems, Inc. (NASDAQ:CSCO) advanced 0.2%, 1.9%, 0.7% and 0.8%, respectively.
Internet stocks from the Technology sector such as Facebook, Inc. (NASDAQ:FB), FireEye, Inc. (NASDAQ:FEYE), Yahoo! Inc. (NASDAQ:YHOO), Yelp, Inc. (NYSE:YELP) and LinkedIn Corporation (NYSE:LNKD) increased 3.5%, 4.7%, 0.3%, 3.3% and 2.9%, respectively. Overall, the Technology Select Sector SPDR (XLK) rose 0.9%.
Bio-tech stocks also rallied on Tuesday. Stocks such as Gilead Sciences Inc. (NASDAQ:GILD), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), Amgen Inc. (NASDAQ:AMGN), Biogen Idec Inc. (NASDAQ:BIIB) and Celgene Corporation (NASDAQ:CELG) increased 1.5%, 3.3%, 1.4%, 3.4% and 3.3%, respectively.
Encouraging economic numbers also boosted investor sentiment. According to the US Census Bureau, new orders for manufactured durable goods in April increased 0.8%, in contrast to the consensus estimate of a 0.7% decline. Excluding transportation, new orders for manufactured durable goods increased 0.1% in April. Unfilled orders for manufactured durable goods in April were up 1.0%.
The Conference Board reported that the Consumer Confidence index had increased from 81.7 in April to 83.0 in May. The rise was slightly less than the consensus estimate of an increase to 83.1. The Expectations Index went up from 83.9 to 84.8. The Present Situation Index also increased from 78.5 to 80.4.
Separately, the S&P/Case-Shiller Home Price Indices revealed that 20-City composite index, rose 12.4% year-on-year in March. However, the rate of growth declined from February’s year-on-year rise of 12.9%. Key housing stocks from the sector such as Toll Brothers Inc. (NYSE:TOL) and PulteGroup, Inc. (NYSE:PHM) gained 0.4% and 0.5%, respectively. Overall, the SPDR S&P Homebuilders ETF (XHB) increased 0.2%.
All the 10 sectors of the S&P 500 ended in the green. The Financials sector along with the Technology sector gained the most. The Financial Select Sector SPDR (XLF) increased 0.9%. Top holdings from the sector such as Wells Fargo & Company (NYSE:WFC), JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corporation (NYSE:BAC), Citigroup Inc. (NYSE:C) and American Express Company (NYSE:AXP) increased 0.8%, 1.1%, 3.4%, 0.6% and 2.9%, respectively.