A wide range of US stocks, including DuPont, Bank of America and Exxon Mobil, climbed on Tuesday, indicating increased confidence in the US economy, although continued worries about the European economy kept the gains in check.
The Dow Jones Industrial Average rose 123.49 points (1.26%) to 9,939.98, snapping a two-day losing streak. DuPont led the measure's gains with a jump of $1.40 (4.1%) to $35.49, after the company's finance chief reiterated DuPont's earnings forecast for the next few years. Among the Dow's other top performers, Bank of America climbed 50 cents (3.4%) to $15.33. Exxon Mobil advanced $1.94 (3.3%) to $61.24, lifted by an increase in crude-oil futures to nearly $72 a barrel.
McDonald's climbed $1.63 (2.4%) to $68.38. The fast-food giant's global same-store sales rose 4.8% in May, exceeding some analysts' views, although the company said it anticipates foreign-exchange rates, especially a weakening euro, to hurt earnings for the year.Intel was among the Dow's few decliners with a drop of 13 cents (0.6%) to $20.18. A broker cut its investment rating on the chip maker's stock to neutral from positive, citing signs of weakness in the personal-computer market.
The Nasdaq Composite slipped 3.33 (0.15%) to 2,170.57, its lowest close since Feb. 10. Weighing on the measure, Amazon.com slid $3.18 (2.6%) to $118.83, eBay declined 14 cents (0.7%) to $21.69, and Google was off 74 cents (0.2%) to $484.78, all on the Nasdaq. A Wall Street bank cut its 2011 estimates on those stocks and several others in the technology sector, citing the US dollar's climb, among other factors.
Amazon was also hurt by competitive concerns after Apple Chief Executive Steve Jobs said that iBooks, the e-reading application on its iPad tablet computer and soon coming to the iPhone and iPod Touch, has helped it capture a 22% share of e-book sales - an area previously dominated by Amazon's Kindle e-reader. Still, Apple gave back $1.61 (0.6%) to $249.33.
The Standard & Poor's 500 index rose 11.53 (1.10%) to 1,062.00, its first gain in three days. All of the measure's sectors rose, with materials in the lead while the technology sector lagged.
The action followed reassuring comments from Federal Reserve Chairman Ben Bernanke that the US economy will continue to recover, although not at a pace strong enough to bring unemployment down quickly. The Fed chief said the US recovery probably began sometime late last summer and that consumer spending and business investments appear to be taking over from the fading government stimulus in lifting the economy.
However, investors remained concerned about Europe's sovereign-debt issues, especially after Fitch Ratings cautioned that the UK's fiscal challenge is "formidable" and warrants a faster pace of deficit reduction than was outlined in the April 2010 budget issued by the previous Labour government.
Uncertainty over the oil spill in the Gulf of Mexico also continued to weigh on the market.
For Australian ADRs listed on the NYSE, BHP Billiton increased $3.17 (5.42%) to US$61.61, Rio Tinto Plc rose $1.62 (3.74%) to US$44.90, ResMed lost 11 cents (0.17%) to US$62.83, Telstra Corporation gained 65 cents (5.28%) to US$12.95, Telecom Corporation of NZ advanced 2 cents (0.33%) to US$6.08 and Westpac increased $4.06 (4.55%) to US$93.26.
At 7:45 AM (AEST), the 10-year Treasury note yield was 3.18% and the five year yield was 1.98%.
European shares declined for the third straight session on Tuesday, as comments on the UK's finances from Fitch pushed sovereign debt back into the spotlight and Tesco and Munich Re lost ground.
After rising as high as 243.68 early in the session following reassuring comments on the US economy from Federal Reserve chairman Ben Bernanke, the Stoxx Europe 600 index shed 1.3% to 239.67.
Sentiment soured after the Fitch credit-rating agency said that the UK's fiscal challenge is "formidable" and warrants a faster pace of deficit reduction than outlined in the April budget.
Several European countries are already facing opposition to deficit reduction plans and a 24-hour strike called by Spain's biggest trade unions got underway on Tuesday.
Banks, leveraged to economic growth, were particularly weak with British lender Barclays down 3.3% and Spanish banking group BBVA down 1.6%.
French bank Societe Generale fell 2.2%. The trial of Jerome Kerviel, the alleged rogue trader who bet EUR50bn on European stock markets while employed by the bank started on Tuesday.
UBS lost 1.9% after the lower house of the Swiss parliament rejected a bill that would have paved the way for UBS to hand over the names of thousands of clients to US tax authorities. If the US doesn't get those names soon it has threatened to take further action against Switzerland's biggest bank.
On a regional level, the UK FTSE 100 index closed down 0.8% to 5,028.15, the German DAX index fell 0.6% to 5,868.55 and the French CAC-40 index dropped 1% to 3,380.36.
German reinsurance giant Munich Re lost 0.2% after lifting its estimate for pretax losses from the Feb. 27 earthquake in Chile to around $1bn, from a previous forecast of around $700m. The firm also lifted its estimate for losses for the market, to $8bn, from $4bn to $7bn.
Deutsche Telekom dropped 0.8%, Vodafone Group fell 1.5% and France Telecom lost 0.9%. All four firms had challenged a decision by the European Union to impose caps on prices charged for roaming calls but that decision was upheld by the European Court of Justice on Tuesday.
Irish airline Aer Lingus Group declined 5.4% after it carried 876,000 passengers in May, down 9.9% compared to the same period last year.
In the aerospace sector EADS shares rose 0.6% after Emirates placed an order for an additional 32 Airbus A380 jets, at a total list price of $11.5bn.
On the FTSE 100, Rio Tinto improved 10.00 pence (0.33%) to 3,062.34 pence and BHP Billiton climbed 33.00 pence (1.9%) to 1,772.64 pence.
Most Asian markets arrested sharp recent declines to clinch modest gains as investors looked for bargains in selective stocks in the resource and exporting industries.
Japan's Nikkei Stock Average climbed 0.2%, Hong Kong's Hang Seng Index gained 0.6% and China's Shanghai Composite inched up 0.1%.
New Zealand shares fell to a 10-month low, following global markets lower after a public holiday on Monday. The benchmark NZX-50 ended 1.4%, or 41.16 points, lower at 2,988.98, its lowest level since July 27.
Base metals rebounded sharply on the London Metal Exchange, assisted by a recovering euro and some pent-up buying after a steep correction in recent days. A steadier, albeit mixed, performance in global equity markets also brought relief to the metals. Aluminium rose $35 (1.87%) to $1,910 while copper firmed $5 (0.08%) to $6,130 and nickel added $5 (0.03%) to $18,450. Zinc strengthened $85 (5.21%) to $1,715 and lead gained $70 (4.49%) to $1,630. Comex copper was last quoted at 280.45 US cents per pound.
Gold futures rose to their highest-ever settlement, building on a three-day winning streak driven by investor appetite for a haven amid euro-zone worries. Spot gold was last quoted at $1,234.63. Comex gold futures improved $4.80 (0.39%) to $1,245.60. Spot silver was last quoted at $18.19.
Crude rose on expectations of a second consecutive week of draws on US crude stocks. West Texas Intermediate was last quoted at US$71.99 per barrel.
At 07:45 a.m. (AET) the US dollar was quoted at 0.8354 euros, 91.53 yen, 1.209 AUD and 69.15 pence.