Market Wrap for Tuesday, February 26: Stocks Rally Back From Steep Monday Losses

A day after the Dow fell more than 200 points and the VIX surged 35 percent, the U.S. stock market bounced back.

Better than expected new home sales along with strongly rebounding consumer confidence helped spur risk appetite on the day. Investors also reacted to comments from Fed Chairman Ben Bernanke defending the central bank's bond buying stimulus program.

The Dow led the way on Tuesday, notching a gain of better than 100 points.

Major Averages

The Dow Jones Industrial Average rose 117 points, or 0.85 percent, to 13,901.

The S&P 500 was up 9 points, or 0.61 percent, to 1,497.

The Nasdaq was the laggard on the session, but still added 13 points, or 0.43 percent, to 3,130.

New Home Sales

New home sales were strongly higher in January, rising 15.6 percent from 378,000 in December to 437,000 in the most recent month. This came in way above consensus expectations of 383,000 and helped spark a stock market rally on Tuesday.

Consumer Confidence

The market was also buoyed by a better than expected consumer confidence reading on Tuesday. The Conference Board's Consumer Confidence Index jumped to 69.0 in February compared to 58.6 reading in January. This easily beat consensus estimates calling for an increase to 62.0.

Commodities

Crude oil prices fell on Tuesday despite a rally in the equity market. Near the end of the day, NYMEX crude futures, the U.S. benchmark, were down around 0.67 percent to $92.50. Brent crude futures had lost 1.57 percent to $112.64. Natural gas bucked the trend lower in energy markets and was last trading up 0.38 percent to $3.43.

Precious metals rallied for a second straight day on Tuesday. Near the close of the equity market, COMEX gold futures had gained 1.71 percent to $1,615.50. Silver futures had added a little better than 1 percent to $29.32.

In the agricultural complex, both corn and wheat climbed on the day. At last check, corn was up 1.35 percent while wheat had gained a little less than 1 percent. In soft commodities, cocoa lost around 1 percent while orange juice concentrate futures were down around 2 percent.

Bonds

Near Tuesday's close, the iHSares Barclays 20+ Year Treasury Bond ETF (NYSE:TLT) was down around 0.54 percent to $118.70. Lower Treasury prices caused yields to rise on the day.

At the front end of the curve, yields were unchanged with the 2-Year Note and 5-Year Note holding steady at 0.24 percent and 0.76 percent, respectively. Both the 10-Year Note and 30-Year Bond yields rose two basis points to 1.88 percent and 3.08 percent.

Currencies

The U.S. dollar was slightly higher on Tuesday. Late in the day, the PowerShares DB US Dollar Index Bullish ETF (NYSE:UUP), which tracks the performance of the greenback versus a basket of foreign currencies, was up 0.09 percent to $22.34.

While the closely watched EUR/USD pair fell another 0.84 percent to $1.3068, the Japanese yen appreciated sharply against the greenback with the USD/JPY falling 1.37 percent. Both the pound and Australian dollar lost around 0.50 percent against the U.S. dollar.

Volatility and Volume

The VIX gave back some of Monday's big gains as the stock market rallied back on Tuesday. The widely watched volatility index ended down more than 11 percent at 16.82.

Volume was heavier than usual on Tuesday as investors looked for bargains after Monday's stock market drubbing. Around 170 million SPDR S&P 500 ETF (NYSE:SPY) shares traded hands compared to a 3-month daily average of 133.7 million.

Stock Movers

CommonWealth REIT (NYSE:CWH) soared around 54 percent on Tuesday after Corvex Management and Related Fund Management disclosed a near 10 percent stake in the REIT and said they were prepared to acquire the office building operator. They also pushed for management to cancel a planned share offering.

Home Depot (NYSE:HD) shares climbed more than 5 percent after the home improvement chain released its quarterly earnings results.

Cracker Barrel (NASDAQ:CBRL) jumped almost 9 percent after its fiscal Q2 results.

Vitamin Shoppe (NYSE:VSI) plunged almost 19 percent after the company reported disappointing fiscal fourth-quarter results.

U.S. Silica Holdings (NYSE:SLCA) surged almost 18 percent on Tuesday after the company posted upbeat Q4 results and guidance.

Titan International (NYSE:TWI) plunged more than 15 percent on the session after a disappointing second-quarter earnings report.

Spreadtrum Communications (NASDAQ:SPRD) fell almost 4 percent after the company reported its Q4 earnings results and provided guidance for the first-quarter.