Market Wrap for Tuesday, February 19: Stocks Post Gains on Improving Risk Sentiment

It was a quiet day on Wall Street to start the new trading week as volume remained subdued.

Continued market momentum and upbeat sentiment, however, sent stocks higher throughout the trading day with the major averages closing near their best levels.

The S&P 500 and Nasdaq led the gains which were helped by better risk sentiment in the wake of a series of M&A deals in recent days.

Major Averages

The Dow Jones Industrial Average added 54 points, or 0.39 percent, to close at 14,036.

The S&P 500 rose around 11 points, or 0.73 percent, to 1,531.

The Nasdaq Composite registered a gain of just under 22 points, or 0.68 percent, to 3,214.

Commodities

Crude oil followed stocks higher on Tuesday. At last check, NYMEX crude futures, the U.S. benchmark, had added around 0.80 percent and were trading at $96.66. Brent contracts were flat at $117.38. Natural gas also rallied on the session and was last trading up around 3.65 percent to $3.27.

Gold and silver traded lower on the day. Late in the equity trading session, COMEX gold futures were down 0.34 percent to $1,604. Silver had lost almost 1.60 percent to $29.40. Copper futures also lost around 2 percent on Tuesday.

In the agricultural complex, corn and wheat fell on the session while the other grains were higher. Corn traded down around 0.70 percent while wheat lost 1.30 percent.

In softs, both cocoa and coffee lost more than 1 percent while sugar and cotton both added more than 1 percent. Orange juice concentrate futures fell around 4 percent on the day.

Bonds

Bond prices were higher for much of the session before falling throughout the afternoon. Near the close of equity trading, the iShares Barclays 20+ Year Treasury Bond ETF (NYSE:TLT) was down around 0.50 percent to $115.88. The fall in prices pushed yields higher.

The yield on the 2-Year Note was flat on the session at 0.27 percent. The yield on both the 5-Year and 10-Year Notes rose one basis point to 0.87 percent and 2 percent, respectively. The yield on the 30-Year Bond climbed 1 basis point to 3.18 percent.

Currencies

The U.S. dollar was essentially flat on Tuesday. Late in the equity session, the PowerShares DB US Dollar Index Bullish ETF (NYSE:UUP), which tracks the performance of the greenback versus a basket of foreign currencies, was unchanged at $21.96.

The closely watched EUR/USD pair was last trading up around 0.04 percent to $1.3336. The USD/JPY was down 0.58 percent to 93.51000. The other significant mover on Tuesday was the AUD/USD which rose 0.56 percent on the back of strong risk appetite.

Volatility and Volume

The VIX fell on Tuesday and remains near 52-week low levels as volatility expectations remain muted. The index lost around 1 percent on the session and closed at 12.34.

Volume remained very low on Tuesday to start the week. Around 71 million SPDR S&P 500 ETF (NYSE:SPY) shares traded hands compared to a 3-month daily average of 130 million.

Stock Movers

Shares of OfficeMax (NYSE:OMX) were up around 21 percent on Tuesday after reports indicated that the company is in advanced merger talks with Office Depot (NYSE:ODP). The latter stock rose 9 percent to $5.01 after opening above $6.

Staples (NASDAQ:SPLS), which is a primary competitor to both OfficeMax and Office Depot jumped 13 percent as some analysts said any merger between OMX and ODP would ultimately benefit Staples.

Sealed Air Corp (NYSE:SEE) added 9 percent after the company's Q4 earnings results came in ahead of expectations.

Perry Ellis International (NASDAQ:PERY) lost 13 percent to $16.79 after the company provided Q4 and full-year guidance which was well below Wall Street expectations.

Red Robin Gourmet Burgers (NASDAQ:RRGB) jumped around 19 percent after the company released bullish Q4 earnings results.

Humana (NYSE:HUM) fell almost 7 percent after a government proposal for Medicare Advantage rates in 2014 came in worse than expected.

Shares of Digital Generation (NASSDAQ:DGIT) plunged more than 28 percent after the company's strategic review turned up no formal offers.

AMR Corp. (PINK:AAMRQ) jumped around 12 percent after the stock soared last week on news that the bankrupt company was merging with US Airways (NYSE:LCC).

SunPower (NASDAQ:SPWR) surged around 17 percent on whispers that solar firms may look to spin-off tax-free income from solar projects using a REIT-like structure.

Yandex (NASDAQ:YNDX) fell 10 percent after the company released its Q4 financial results.