NEW YORK—U.S. stocks rallied Tuesday, as better-than-expected economic news outweighed continued weakness in the eurozone.
The Dow Jones Industrial Average gained 17 points, or 0.1 percent, while the S&P 500 jumped 6 points, or 0.5 percent. The technology-heavy Nasdaq Composite Index led all major indices with a gain of 29 points, or 1 percent.
Shares were led by the technology sector. Hewlett-Packard Co. jumped to a 3.4 percent gain, which was the biggest gainer among all Dow components.
The rally was spurred by a better-than-expected October retail sales report, which some analysts took as a harbinger of things to come during the 2011 holiday shopping season. Retail sales gained 0.5 percent month over month in October, which puts year-to-date gains at more than 7 percent.
“An annual figure of +7.0 percent or higher is quite good. Even after factoring out an inflation rate that is approaching +4.0 percent, it establishes a solid base for overall economic activity,” wrote RCD Chief Economist Alex Carrick in a research note.
Investors have been reacting negatively over the last few weeks due to the lingering sovereign debt crisis in Europe, specifically the bonds of Italy and Spain. Last week, Italian bond yields spiked to over 7 percent for the first time, an unsustainable level, which prompted Ireland, Greece, and Portugal to seek bailouts.
On Tuesday, new Prime Minister Mario Monti was sworn in, taking over for Silvio Berlusconi. Greece last Friday also introduced a new PM, Loukas Papademos. Both moves were made in part to appease the financial markets, which have punished their respective bonds due to the fiscal issues facing those nations.
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