US stocks rose modestly on Tuesday, as gains in the tech sector helped buoy the Nasdaq to a record intraday high and solid housing market data provided more evidence the economy may be picking up momentum.
With the US earnings season winding down, investors are also turning their focus to the likelihood of an interest rate hike in the coming months.
Federal Reserve Chair Janet Yellen’s speech on Friday at Jackson Hole will be scrutinized for clues on the timing of a rate hike, especially after some Fed policymakers in recent days hinted at the possibility of a hike in the near-term.
The meeting, which includes central bankers from across the world, will begin on Thursday and has traditionally been a platform for the Fed to signal the direction of monetary policy.
Data on Tuesday showed new US single-family home sales unexpectedly rose in July, reaching their highest level in nearly nine years as demand increased broadly, brightening the housing market outlook. The PHLX housing sector index rose 1.8 percent for its best daily performance in about six weeks.
“It would be nice to see the economy pick up and be able to support higher interest rates, that would be a win for stocks,” said Terry Morris, senior vice president and managing director of equities for BB&T Institutional Investment Advisors in Reading, Pennsylvania.
“If there is enough economic strength to support higher interest rates, that is the ideal scenario.”
The Dow Jones industrial average rose 17.88 points, or 0.1 percent, to 18,547.3, the S&P 500 gained 4.26 points, or 0.2 percent, to 2,186.9 and the Nasdaq Composite added 15.48 points, or 0.3 percent, to 5,260.08.
Materials, up 0.8 percent, were the best performing sector, led by a 4.8-percent climb in CF Industries after UBS upgraded the stock to a “buy” rating. Technology shares, however, provided the biggest boost to the benchmark S&P index, boosted by a 0.3-percent gain in Apple and 1.1-percent climb in Cisco Systems.
J.M. Smucker dropped 8.1 percent after its quarterly revenue missed estimates. The stock was the primary drag on the consumer staples index, which edged 0.1 percent lower.
Best Buy surged 19.6 percent as the best performer on the S&P 500 after the electronics retailer posted an unexpected quarterly profit.
Advancing issues outnumbered declining ones on the NYSE by a 2.13-to-1 ratio; on Nasdaq, a 1.87-to-1 ratio favored advancers.
The S&P 500 posted 28 new 52-week highs and no new lows; the Nasdaq Composite recorded 147 new highs and 15 new lows.
About 5.56 billion shares changed hands in US exchanges, compared with the 6.33 billion daily average over the last 20 sessions.