US stocks rallied Tuesday on the back of encouraging economic data and positive quarterly earnings from retail giant Wal-Mart.
The Dow Jones Industrial Average was up 103.69 points (1.01 percent) to 10,405.70 at closing trade, ending a five-day losing streak.
The tech-rich Nasdaq composite index gained 27.57 points (1.26 percent) to 2,209.44, while the broader S&P 500 index rose 13.17 points (1.22 percent) at 1,092.55.
“We have had a nice rally… The market is erasing its five-day decline, and perhaps it has begun to stabilize,” said Peter Cardillo, chief market economist at Avalon Partners.
“The fact that Wal-Mart kept its sales intact bodes well with consumer spending,” he told AFP.
Tuesday’s trading opened following a string of cautiously positive data and earning reports, which injected some market enthusiasm after last week’s big losses on concerns about the recovery in the world’s largest economy.
The world’s largest retailer Wal-Mart reported a 2.8 percent rise in sales to 103 billion dollars in the second quarter, more than expected by analysts.
It also upgraded its yearly earnings forecast, but warned that the impact of the faltering economic recovery could hamper sales.
“The slow economic recovery will continue to affect our customers, and we expect they will remain cautious about spending,” said Wal-Mart CEO Mike Duke.
Home improvement chain Home Depot also reported a higher-than-expected quarterly net profit of 6.8 percent and increased its profit outlook.
Consumer spending is seen as the engine of the US economy.
The government also reported on Tuesday that construction of new homes in the US edged up in July by 1.7 percent but permits issued for future housing construction plunged.
The housing sector was at the epicenter of the financial crisis caused by a mortgage meltdown that plunged the world’s largest economy into recession in December 2007.
The US economy began growing again in the middle of last year but recovery has slowed lately, raising the prospect of a double-dip recession.
The Federal Reserve also reported a higher than expected 1.0 percent rise in industrial production in July on the back of auto manufacturing.
Monday’s stock indexes had ended mostly flat amid slow trading.
Among stocks in focus Tuesday, Wal-Mart was up 1.21 percent and Home Depot rose 3.40 percent while department store chain Nordtrom climbed 2.89 percent.
Shares of the world’s top fertilizer producer Potash shot up by more than 27 percent after it rejected a 38.6-billion-dollar-takeover bid by BHP Billiton.
The bond market was lower. The yield on the 10-year US Treasury bond was up to 2.645 percent from 2.575 percent Monday while that on the 30-year bond rose to 3.770 percent from 3.720 percent. Bond yield and prices move in opposite directions.