North American stocks on Tuesday rebounded from the most severe selloff of the year on Monday, driven by declining European bond yields, good earnings and a better-than-expected reading on U.S. services sector activity last month.
The S&P 500 was up 14 points or 0.9 per cent, to 1509. The blue-chip Dow Jones industrial average was up 110 points or 0.8 per cent, to 13,990 – a day after suffering its first triple-digit decline of 2013. In Canada, the S&P/TSX composite index was up 22 points or 0.2 per cent, to 12,739.
The ISM non-manufacturing index fell to 55.2 in January from 55.7 in the previous month. However, the reading remained in expansion territory and topped economists’ expectations of 55.
Within the S&P 500, all 10 subindexes were higher, suggesting a broad rally. Technology stocks, consumer staples and health care stocks rose 1.1 per cent each. Financials rose 0.9 per cent.
Dell Inc. rose 0.9 per cent after it confirmed rumours that it will conduct a leveraged buyout of the computer maker, taking the company private at $13.65 (U.S.) a share in a deal valued at $24.4-billion. Bloomberg News had reported a couple of weeks ago that a deal was in works, contributing to a 32 per cent gain for the share price this year – though the shares remain well off their previous highs and are below the offer price.
Estée Lauder Cos. Inc. rose 5 per cent and Computer Sciences Corp. rose 10.3 per cent after both companies topped expectations with their quarterly earnings.
Yum Brands Inc. fell 3 per cent after lowering its forecast for this year’s earnings.
Within Canada’s benchmark index, consumer staples and industrials rose 0.5 per cent each, while energy stocks rose 0.3 per cent and materials were flat.
Technology stocks rose 2.8 per cent, driven by Research In Motion Ltd.’s 8 per cent rally. RIM launched its new BlackBerry 10 smartphone amid reports of strong demand among Canadian carriers and wireless retailers in the U.K.
In Europe, the U.K.’s FTSE 100 rose 0.6 per cent and Germany’s DAX index rose 0.4 per cent.
European shares were clobbered on Monday as bond yields in Italy and Spain surged amid a flareup of the debt crisis. Yields retreated on Tuesday.