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U.S. markets surged overnight with the after a U.S. services sector report showed continuing improvement.
By the close of trade the Dow Jones had surged 126 points to the new record close of 14,254, while the NASDAQ leapt 42 points to 3224. The S&P 500 climbed 15 points to 1540 - and is now less than two per cent from its record high.
Analysts are citing continued support for the Fed's monetary easing policies as well as improved corporate profits as the reasons for the recovery.
There are now concerns, however, that the new peaks for the blue chip index raise worries that buying now means buying at the top, while investors are also concerned that the eventual scaling back of the Fed's stimulus policies could significantly impact stocks.
Gains were fuelled Tuesday as the Institute for Supply Management's non-manufacturing survey for February climbed to 56%, up from 55.2% the month before. Economists expected the index to hold steady.
Later this week, investors will look at central bank meetings in Europe, Japan and the U.K., with Friday promising the all-important monthly jobs report. Economists surveyed by MarketWatch forecast payrolls to rise by 160,000, compared to 157,000 in January. The unemployment rate is expected to be unchanged at 7.9%.
Overseas on Tuesday, Asian markets fed off U.S. gains in the prior session, as Chinese stocks attracted buyers. The Shanghai Composite Index fell 3.7% on Monday, but climbed back up by 2.3% today as outgoing Premier Wen Jiabao announced a growth target of 7.5% for 2013 - meeting expectations.
On the corporate front, J.C. Penny Co. (NYSE:JCP) slid about 9% after Vornado Realty Trust (NYSE:VNO), its second biggest shareholder, sold almost half its stake in the struggling department-store company, according to media reports which cited people familiar with the offering.
Vornado sold a 10-million share block of J.C. Penney stock at $16.40 each through Deutsche Bank AG, said the people, who asked not to be identified citing lack of authorization to speak publicly.
The retailer is also in the midst of a court battle with Macy's (NYSE:M) over claims that Martha Stewart Living Omnimedia violated a prior agreement with Macy's in entering a new contract with J.C. Penney.
Elsewhere in retail, American Apparel Inc. (NYSEAMEX:APP) climbed 19% after forecasting sales for this year that exceeded analysts’ estimates. The retailer projected sales of $654 to $660 million in 2013. That beat the $650.2 million average of two analyst estimates in a Bloomberg survey.
Sears Holdings Corp. (NASDAQ:SHLD) jumped more than 6% after its chairman and CEO Eddie Lampert, whose ESL Investments is a majority shareholder of the company, bought 1.24 million shares of the company for $55 million using personal funds in a private transaction. The news was disclosed in a regulatory filing late Monday.
Tech stocks jumped in early trades on Tuesday, led by an upswing in the broad market and a strong jump at Qualcomm Inc. (NASDAQ:QCOM) after the maker of chipsets for wireless devices hiked its dividend.
Qualcomm shares rose almost 2% after the company raised its quarterly dividend by 40% to 35 cents a share, and added a new $5 billion buyback to replace a previous $4 billion program.
Yahoo (NASDAQ:YHOO) shares rose by 0.7% after the company was upgraded to a buy rating by Cantor Fitzgerald.
Dell Inc's (NASDAQ:DELL) largest outside shareholder, Southeastern Asset Management, is demanding the PC maker open its books, signaling that it could become more active in opposing founder Michael Dell's proposal to take the company private. Southeastern Asset, which holds more than 8 percent of Dell shares including options, asked for the records in a regulatory filing Tuesday on behalf of its largest client, Longleaf Partners Fund.
Also in focus Tuesday, Apple (NASDAQ:AAPL) shares rose 2.3% after declining in the previous session as analysts expressed concerns on sales of its devices. Its stock is still down more than 19% so far this year.
In earnings news, Santarus (NASDAQ:SNTS) jumped more than 12% after reporting fourth quarter results that topped market views late Monday.
After the market close, gun maker Smith & Wesson Holding Co (NASDAQ:SWHC) is expected to report quarterly results.
In other corporate news, Acura Pharmaceuticals Inc. (NASDAQ:ACUR) shares surged 52% after the pharmaceutical company said Tuesday drug store chain Kerr Drug would stock its pseudoephedrine drug Nexafed. The company reported late Monday a fourth-quarter net loss that widened to $3 million, or 6 cents a share, from a year-ago loss of $1.6 million, or 3 cents a share. It had no quarterly revenue in either period.
Impax Laboratories (NASDAQ:IPXL) shares were down more than 25% after it said late Monday that the U.S. FDA found continuing problems at its California manufacturing facility, which could impact drug applications going forward.
Oil futures posted their first increase in four sessions as equities rallied on the back of data that showed growth in the U.S. services sector.
April crude rose 70 cents, or 0.8%, to settle at $90.82 a barrel on the New York Mercantile Exchange.
Gold futures for April also finished higher on Tuesday, albeit slightly, lifted by a weaker dollar as investors focused on equities, but the yellow metal's safe haven appeal was dulled after the encouraging economic data in the U.S.
Gold for April delivery rose $2.50, or 0.2%, to settle at $1,574.90 an ounce on the Comex division of the New York Mercantile Exchange.
Bank of America Merrill Lynch altered its outlook on gold prices Tuesday, saying it doesn’t expect gold to break above $2,000 until 2014. The bank also cut its prices for this year and next.
European markets closed sharply higher today with shares in Germany leading the region. The DAX was up 2.32% while France's CAC 40 rose 2.09% and Britain's FTSE 100 advanced 1.36%.
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