FOX Business: The Power to Prosper
In a dramatic reversal of Monday's rout, the blue chips charged higher on Tuesday as traders overcame fears about Europe's debt crisis for the moment.
The Dow Jones Industrial Average climbed 163 points, or 1.3%, to 12574, the S&P 500 rallied 15.3 points, or 1.2%, to 1324 and the Nasdaq Composite jumped 33.3 points, or 1.2%, to 2843.
The materials, financial, energy, consumer discrectionary and industrial sectors, that are seen as especially sensitive to the world's economic fluctuations, posted the biggest gains by a wide margin. Meanwhile, defensive sectors like utilities, health care and consumer staples lagged behind the broader markets.
The yield on U.S. Treasury bonds rose as traders moved out of the safe-haven asset class. The 10-year yield climbed 0.060-percentage point to 1.661%. Still, traders were keeping a close eye on the unfolding situation in Europe.
A $125 billion deal to recapitalize Spanish banks proved insufficient to keep the country's borrowing costs from rising to painful levels. They remained elevated on Tuesday, with the benchmark 10-year note yielding 6.8%, matching a euro-era high. The price of insuring Spanish debt against a default also lurched to yet another record high, according to London-based financial data firm Markit.
Italian yields also remained well above the 6% level, causing fears that either country could lose access to borrowing on private markets. However, Italian Prime Minister said in a radio interview that the country will not need a bailout now or in the future, according to several media reports.
The Greek election that is likely to seal the country's fate in the eurozone is also set to take place on Sunday. As a result, many trades said they remained cautious to make big bets with so much potential volatility on the horizon.
On the economic front, a report from the Labor Department showed U.S. import prices fell 1% in May as expected, while export prices fell by 0.4%, more than the 0.1% decline expected. Both are forecast to have cooled down over the month of May.
The U.S. federal budget deficit came in at $124.6 billion in May, compared with $57.6 billion a year ago, according to the Treasury Department. For the 2012 fiscal year, the budget gap is running at $844 billion, compared with $927 billion in a comparable period in fiscal 2011.
Energy futures were little changed after sustaining heavy losses in the last session. The benchmark crude oil contract traded in New York gained 62 cents, or 0.75%, to $83.32 a barrel. Wholesale New York Harbor gasoline slipped 0.24% to $2.65 a gallon.
In metals, gold climbed $17.00, or 1.1%, to $1,614 a troy ounce.
The Euro Stoxx 50 rose 0.27% to 2143, the English FTSE 100 gained 0.76% to 5474 and the German DAX climbed 0.33% to 6161.
In Asia, the Japanese Nikkei 225 sold off by 1% to 8537 and the Chinese Hang Seng edged lower by 0.43% to 18873.