Investing.com -- U.S. stocks surged more than 2% on Tuesday returning to their highest level since mid-January, as a bevy of strong economic data helped reduce persisting fears of a potential recession.
On Tuesday morning, the Institute for Supply Management reported that its Purchasing Manufacturing Index rose 1.3 points to 49.5 in February, slightly above consensus forecasts of a 0.3 increase to 48.5. It came amid sharp increases in production and employment in the sector, providing some optimism of a breakthrough in the beleaguered factory industry. In addition, construction spending surged 1.5% in February and by more than 10% on an annual basis due to an uptick in highway & street spending, while U.S. auto sales soared 8% to a 15-year February high. As consumers take advantage of deep discounts at the pump and low borrowing rates, analysts expect yearly auto sales to eclipse last year's record-high of 17.5 million vehicles.
As a result, the Dow Jones Industrial Average jumped 348.58 or 2.11% to 16,865.08, while the NASDAQ Composite index gained 131.65 or 2.89% to 4,689.60, due primarily to strong performances from pharmaceutical and tech stocks. The S&P 500 Composite index, meanwhile, added 46.12 or 2.39% to 1,978.35, as nine out of 10 sectors closed in the green. Stocks in the beaten down Financial industry, as well as the technology sector led, each gaining more than 3%. Stocks in the utilities sector, the lone sector to close in the red, lagged on Tuesday.
JPMorgan Chase & Co (N:JPM) gained 2.75 or 4.88% to close at 59.05, underscoring Tuesday's rally among top financial institutions. JP Morgan, the top performer on the Dow, had previously fallen more than 14% over the prior three months over concerns with its exposure to the downtrodden oil sector and declines in debt-issuance revenue. The worst performer was United Technologies Corporation (N:UTX), which fell 1.67 or 1.73% to 94.95, after Honeywell International Inc (N:HON) announced it was ending its merger pursuit with the multinational conglomerate, due to the company's "unwillingness to engage in negotiations." Honeywell claimed the potential merger would have created an estimated $3.5 billion in cost synergies, while United Technologies (NYSE:UTX) blamed a challenging regulatory environment for the inability to reach a deal.
The biggest gainer on the NASDAQ was Alexion Pharmaceuticals Inc (O:ALXN), which surged 9.00 or 6.39% to 149.80. A day earlier, Alexion opened new company headquarters in New Haven, Connecticut, marking its return to the city where it was founded nearly 25 years ago. State officials have promised Alexion up to $25 million in tax credits if it can hire an additional 675 workers in Connecticut by 2017. The worst performer wasTesla Motors Inc (O:TSLA) which fell 7.05 or 3.67% to 184.88. Earlier on Tuesday, analysts at firm Citron Research disclosed a short position in Tesla, citing current supply and demand concerns.
The top performer on the S&P 500 was Range Resources Corporation (N:RRC), which added 1.88 or 7.92% to 25.61. U.S. crude futures opened the month by surging to its highest level since January 6, before closing at $34.41, up nearly 2% on the session. The worst performer was PEPCO Holdings Inc (N:POM), which plunged 3.57 or 13.64% to 22.61. Shares in PEPCO fell sharply after Washington D.C. mayor Muriel Bowser failed to lend support to a potential $6.8 billion merger with Chicago-based Exelon (NYSE:EXC), all but eliminating hopes for a deal which could create the nation's largest electric utility.
On the New York Stock Exchange, advancing issues outnumbered declining ones by a 2,494 to 583 margin.