Stocks on Tuesday rebounded from the most severe selloff of the year, driven by declining European bond yields, strong earnings and a better-than-expected reading on U.S. services sector activity last month.
The S&P 500 closed at 1511.29, up 15.58 points or 1 per cent, recovering nearly all the ground lost during Monday’s session. The blue-chip Dow Jones industrial average closed at 13,979.30, up 99.22 points or 0.7 per cent – a day after suffering its first triple-digit decline of 2013. In Canada, the S&P/TSX composite index closed at 12,745.65, up 28.03 points or 0.2 per cent.
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 – defined as a reading above 50 – and topped economists’ expectations of 55.
Meanwhile, concerns about a flareup of the European debt crisis eased: Yields on Italian and Spanish government bonds eased after spiking on Monday over a potential political crisis in Spain.
Dell Inc. rose 1.1 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 32.5 per cent gain for the share price this year – though the shares remain well off their record high and are below the offer price.
Estée Lauder Cos. Inc. rose 6 per cent and Computer Sciences Corp. rose 9.2 per cent after both companies topped expectations with their quarterly earnings.
Yum Brands Inc. fell 2.9 per cent after lowering its forecast for this year’s earnings.
McGraw-Hill Companies fell 10.7 per cent, adding to Monday’s steep slide after the U.S. Justice Department accused its Standard & Poor’s unit of defrauding investors over ratings given to mortgage securities. The Justice Department says it is seeking $5-billion in its civil lawsuit.
Research In Motion Ltd.’s rose 6.3 per cent, adding to gains won on Monday. RIM launched its new BlackBerry 10 smartphone amid reports of strong demand among Canadian carriers and wireless retailers in the U.K.