North American stocks were up in midday trading on Tuesday, as major indexes continued to rebound from last week’s decline amid strong earnings and speculation of a rate cut in Europe.
The S&P 500 was up 17 points or 1.1 per cent, to 1580. The blue-chip Dow Jones industrial average was up 150 points or 1 per cent, to 14,717. In Canada, the S&P/TSX composite index was up 24 points or 0.2 per cent, to 12,115.
The moves follow the biggest European rally in eight months, even as a reading on euro zone services and factory output in April pointed to the 15th straight contraction. The reading from Markit Economics, at 46.5, was in line with expectations, but nonetheless raised the idea that the European Central Bank will need to provide additional economic stimulus in the form of an interest rate cut.
In Europe, the FTSE 100 rose 2 per cent and Germany’s DAX index rose 2.4 per cent.
In the United States, new single-family home slaes rose 1.5 per cent in March, in line with expectations.
Within the S&P 500, cyclical stocks led the gains, while defensives lagged – a noticeable reversal to a trend that has favoured defensives so far this year. Financials rose 1.8 per cent, technology stocks rose 1.6 per cent and consumer discretionary stocks rose 1.1 per cent.
Netflix Inc. surged 24.7 per cent after the movie-streaming company reported quarterly results on Monday evening, highlighted by a better-than-expected rise in new subscribers.
Bank of America Corp. rose 3.6 per cent after Morgan Stanley upgraded its recommendation on the stock to “overweight.”
E.I. du Pont de Nemours and Co. rose 3.2 per cent after its net income more than doubled in the first quarter and it said that growth fundamentals “remain solid.”
Apple Inc. rose 1.8 per cent, ahead of the company’s earnings report, due to be released on Tuesday after markets close.
In Canada, financials and energy stocks rose 0.4 per cent each. Materials fell 1 per cent and telecom stocks fell 0.5 per cent.
Rogers Communications Inc. fell 3.2 per cent after it reported its quarterly earnings on Monday evening, with disappointing subscriber growth.