Stocks Record Modest Gains; Treasuries Plunge

Stocks rose throughout much of Tuesday's trading session and finished the day with modest gains. In other markets, the U.S. Dollar rose while Treasury prices fell sharply on the session.

Top stories on the day included a lawsuit filed by the Justice Department which challenges the merger between U.S. Airways and American Airlines' parent company AMR Corp. The news led to a broad sell-off in airline stocks.

Headlines also focused on the resignation of activist hedge fund manager Bill Ackman from J.C. Penney's board of directors after he failed to oust the retailer's current CEO.

Major Averages
The Dow Jones Industrial Average added 31 points, or 0.20 percent, to 15,451.

The S&P 500 rose a little less than 5 points, or 0.28 percent, to 1,694.

The Nasdaq jumped better than 14 points, or 0.39 percent, to 3,684.

Retail Sales
Retail sales rose 0.2 percent in July after rising 0.6 percent in June. This was in-line with consensus estimates calling for an increase of 0.2 percent in retail sales for July.

Excluding autos, which fell 1.0 percent, retail sales rose 0.5 percent in July. This was above the consensus estimate calling for an increase of 0.3 percent.

Business Inventories
Total business inventories were unchanged for June after declining 0.1 percent in May. This compared to consensus estimates calling for a 0.1 percent increase in business inventories.

Commodities
Crude oil prices rose moderately on Tuesday. At last check, NYMEX crude futures were up 0.51 percent to $106.65 while Brent contracts had climbed 0.60 percent to $109.62. Natural gas fell 0.30 percent on the day to $3.30.

Precious metals were mixed on the session. Near the close of equities, COMEX gold futures were down 0.83 percent to $1,323.10. Silver contracts were last trading up 0.61 percent to $21.47. Copper added 0.36 percent on the day to $3.3150.

Both corn and wheat traded lower on Tuesday. At last check, corn futures were down 3.61 percent while wheat lost a little better than 1 percent. Movers in soft commodities included coffee and cocoa. Coffee futures lost better than 2 percent on the session while cocoa was trading down 1.64 percent.

Bonds
Long-term Treasury prices fell sharply during Tuesday's trading session. Heading into the closing bell, the iShares Barclays 20+ Year Treasury Bond ETF (TLT) was down 1.44 percent to $105.00. Yields rose as prices fell on the day.

Treasury yields were as follows on Tuesday afternoon: The 2-Year Note yield was 0.33 percent while the yield on the 5-Year Note was 1.48 percent. The 10-Year Note and 30-Year Bond were yielding 2.71 percent and 3.75 percent, respectively.

Currencies
The U.S. Dollar rose on the session. Near the close of equities, 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 0.48 percent to $22.09.

The closely watched EUR/USD pair was down 0.38 percent to $1.3260. Other movers included the USD/JPY, which rose 1.60 percent, and the AUD/USD, which fell 0.60 percent.

Volatility and Volume
The CBOE Volatility Index moved lower again on Tuesday. At last check, the widely watched barometer of volatility expectations was down a little less than 4 percent to 12.32.

Volume remained light on Tuesday. Around 67 million SPDR S&P 500 ETF (NYSE: SPY) shares traded hands compared to a 3-month daily average of 133 million.

Stock Movers
Renren (NASDAQ: RENN) surged almost 13 percent on Tuesday on reports that Baidu (NASDAQ: BIDU) may be interested in the company's Nuomi unit.

Jos. A. Bank (NASDAQ: JOSB) jumped almost 13 percent on the day after BeaconLight Capital blasted the board and management in an open letter. The firm wrote that "with the simple changes outlined" in its letter, "we believe that the stock should be worth $70 per share even at a discounted multiple to its peers."

Ubiquiti Networks (NASDAQ: UBNT) jumped nearly 9 percent near the close. The day's gains added to a furious rally in the name over the last week.

Universal Display (NASDAQ: OLED) jumped nearly 10 percent on Tuesday. The Wall Street Journal reported that OLED display makers are set to benefit as "more products sporting the next-generation displays hit the market."

Digital Generation (NASDAQ: DGIT) surged almost 23 percent on the day after the company agreed to sell its television-advertising delivery business to Extreme Reach for $485 million in cash.

Shares of Ply Gem Holdings (NYSE: PGEM) plunged more than 19 percent on the day after the company released disappointing earnings results for the fiscal second-quarter.

Orbitz Worldwide (NYSE: OWW) fell around 13 percent after the company announced that a major institutional shareholder sold 8.1 million of its 24.6 million shares in Orbitz stock.

A lawsuit brought by the Justice Department to block the proposed merger between American Airlines' parent company, AMR Corp. (OTC: AAMRQ) and US Airways Group (NYSE: LCC) sent those two stocks skidding on Tuesday. AMR fell almost 46 percent while US Airways lost 13 percent. Other stocks across the industry also plunged as investors feared that the lawsuit would trigger renewed competitive pressures for airlines.

InterOil (NYSE: IOC) plunged more than 10 percent after the company released its fiscal second-quarter earnings results after the closing bell on Monday.

J.C. Penney (NYSE: JCP) lost around 4 percent after hedge fund manager Bill Ackman resigned from the company's board of directors. Ackman has called for the replacement of CEO Mike Ullman in recent days, a proposal that was resisted by other board members.

BY Scott Rubin