March 28, 2017 (AP)(STL.News) Banks and other financial companies led U.S. stock indexes sharply higher Tuesday, snapping an eight-day losing streak for the Dow Jones industrial average.
The rally was broad, with materials and industrial companies among the biggest gainers. Energy stocks notched a big gain as crude oil prices moved higher.
The market got a boost from new data showing that consumer confidence in the U.S. hit its highest level since 2000.
Investor optimism that Congress and the White House are pivoting to tax cuts and other business-friendly policy proposals after spending recent weeks focused on health care also helped send the market higher, said JJ Kinahan, chief market strategist at TD Ameritrade.
“The consumer confidence number was really good, but more importantly, it seems like both sides of the aisle do want to get something done around tax reform,” Kinahan said. “That’s all the market is really hanging its hat on.”
The Dow rose 150.52 points, or 0.7 percent, to 20,701.50. The 30-company average’s decline in the previous eight consecutive days was its longest slide in more than five years. The Standard & Poor’s 500 index added 16.98 points, or 0.7 percent, to 2,358.57. The Nasdaq composite index gained 34.77 points, or 0.6 percent, to 5,875.14.
Bond prices edged lower. The 10-year Treasury yield rose to 2.42 percent from 2.38 percent.
Since Donald Trump’s presidential election win last November, investors have been optimistic that the administration would deliver on promises to slash taxes, loosen regulations for companies and institute other business-friendly policies. Republicans’ failure to repeal the Affordable Care Act last week dashed some of that optimism, pulling down stocks. But this week, Republicans appear to be shifting their focus back on tax cuts, among other issues.
“The market is sort of in a holding pattern waiting for additional clarity from the administration on corporate tax reform,” said Nadia Lovell, U.S. equity strategist at J.P. Morgan Private Bank. “We do view the pivot away from health care reform on Friday as an overall net positive.”
Trading got off to a downbeat start Tuesday as investors weighed the latest batch of company earnings news. But the market livened up around midmorning when the Conference Board said its consumer confidence index rose this month to its highest level in more than 16 years. The index measures both consumers’ assessment of current conditions and their expectations for the future. Both improved this month.
Traders also got some encouragement from the latest Standard & Poor’s CoreLogic Case-Shiller home price index, which showed that U.S. home prices rose at the fastest pace in more than two years in January.
Mortgage rates are rising, but that’s not expected to affect home sales yet because hiring is still strong, rates are low and there aren’t a lot of homes on the market. That’s a positive combination for homebuilders, many of which have seen their stocks move sharply higher this year. Beazer Homes USA notched the biggest gain among builders Tuesday, adding 38 cents, or 3.3 percent, to $12.06. The stock remains down 9.3 percent this year.
Several companies reported improved quarterly results or outlooks, which also helped put traders in a buying mood.
Darden Restaurants jumped 9.3 percent after the owner of Olive Garden reported strong quarterly results and said it will buy the Cheddar’s Scratch Kitchen chain for $780 million. Cheddar has 165 locations in 28 states. Darden was the biggest gainer in the S&P 500, rising $7.04 to $82.62.
Red Hat climbed 5.2 percent after the open-source software company reported strong sales and solid guidance for the current quarter. The stock added $4.28 to $86.48.
Carnival rose 0.7 percent after the cruise line operator served up solid first-quarter results and a better-than-expected estimate for the second quarter. The stock, which closed at an all-time high on Monday, gained another 39 cents to $59.26.
General Motors rose 2.4 percent after its board voted to reject a proposal from investor David Einhorn to split the automaker’s stock into two classes. GM shares picked up 85 cents to $35.56.
Several major stock indexes overseas closed higher.
In Europe, Germany’s DAX gained 1.3 percent, while France’s CAC 40 rose 0.6 percent. The FTSE 100 index of leading British shares added 0.7 percent. Investors, particularly in U.K.-related assets, will have more to chew on Wednesday when the British government finally triggers the two-year process by which it leaves the European Union.
In Asia, Tokyo’s Nikkei 225 gained 1.1 percent. Hong Kong’s Hang Seng added 0.5 percent. Seoul’s Kospi rose 0.3 percent.
The euro weakened to $1.0808 from $1.0868, while the dollar strengthened to 111.09 yen from 110.57 yen.
Benchmark U.S. crude rose 64 cents, or 1.3 percent, to close at $48.37 per barrel in New York. Brent crude, used to price international oils, climbed 58 cents, or 1.1 percent, to close at $51.33 a barrel in London.
Natural gas added 4 cents to $3.10 per 1,000 cubic feet, wholesale gasoline rose 2 cents to $1.64 per gallon and heating oil gained a penny to $1.52 per gallon.
In metals trading, the price of gold slipped 10 cents to settle at $1,255.60 an ounce. Silver rose 14 cents to $18.25 per ounce. Copper added 4 cents to $2.68 per pound.
ALEX VEIGA, AP Business Writer