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Dow gains 232 points, Nasdaq breaks 6,000 for the first time

Myles Udland
Markets Reporter
Dow gains 232 points, Nasdaq breaks 6,000 for the first time

Stocks rallied for a second day this week as American stalwart brands including Caterpillar (CAT) and McDonald’s (MCD) reported positive earnings that were lifting the Dow in early trading.

The Dow gained more than 200 points for the second straight day while the Nasdaq closed above 6,000 for the first time.

The Dow was up 232 points, or 1.1%, as Caterpillar shares gained a whopping 7.8%.

The benchmark S&P 500 rose 14 points, or 0.6%, and the Nasdaq added 41 points, or 0.7% to close a 6,025. The Dow also traded above 21,000 for much of the afternoon on Tuesday before settling at 20.996.

On Monday, stocks rallied following the first round of the French presidential elections as investors priced out the possibility of far-right nationalist candidate Marine Le Pen winning the presidency.

Disappointing earnings results out Tuesday morning included Lockheed Martin (LMT), which cut its full-year profit outlook as first quarter sales fell short of its prior guidance.

Update 11:39 a.m. ET

Everyone likes rising stock prices. Even Democrats.

Business Insider’s Joe Ciolli reports that, according to a survey of 2,272 high net worth investors conducted by UBS, 57% of Democrats feel optimistic about the short-term outlook for stocks, up from 10% in October.

This comes as consumer confidence continues to remain high and stock prices, even with a stall in mid-March, continue to power higher. And nothing makes people confident about higher stock prices quite like higher stock prices.

This also comes as President Trump and the administration have repeatedly celebrated high stock prices and reiterated that the stock market is a fair barometer of the overall health of the U.S. economy. As Trump told The Associated Press on Friday, “You live by the sword, you die by the sword, to a certain extent.”

Elsewhere in markets, Josh Brown, writing at The Reformed Broker, notes that corporate buybacks are down this year, which puts into question one of the preferred narratives from market bears about why stocks were unsustainable.

“Buybacks by our corporate clients picked up last week to typical April levels, but year-to-date are tracking their lowest of any comparable period since 2013 and are down nearly 30% YoY—suggesting less of a boost to corporate EPS from buybacks,” write analysts at Bank of America Merrill Lynch.

And as Josh adds, “Like NYSE margin debt and quantitative easing, the buyback peak may already have come and gone, without the carnage and ‘you’ll see’ we were warned about so relentlessly coming to pass.”

Update 10:06 a.m. ET

For the first time in a while, we have a miss on consumer confidence.

According to The Conference Board’s reading on consumer confidence for April, the index fell to 120.3 from 124.9 in March. This report also showed that consumers’ assessment of their present situation and expectations fell in April.

“Consumer confidence declined in April after increasing sharply over the past two months, but still remains at strong levels,” said Lynn Franco, director of economic indicators at The Conference Board.

“Consumers assessed current business conditions and, to a lesser extent, the labor market less favorably than in March. Looking ahead, consumers were somewhat less optimistic about the short-term outlook for business conditions, employment and income prospects. Despite April’s decline, consumers remain confident that the economy will continue to expand in the months ahead.”

Elsewhere in economic data on Tuesday, we got a beat from the U.S. housing market and the manufacturing sector. New home sales for the month of March rose by 5.8%, better than the 1.4% decline that was expected and hitting an annualized rate of 621,000.

The February reading on home prices from S&P/Case-Shiller showed prices rose 0.69% over the prior month, just below expectations for a 0.72% increase, while rising 5.85% over last year, more than the 5.78% that was expected. The FHFA’s reading on home prices in February topped expectations, rising 0.8% against expectations for 0.4%.

Meanwhile, the Richmond Fed’s manufacturing index for April hit 20, beating expectations for a reading of 16. Any reading over 0 indicates expansion.

Trump update

In other headlines on Tuesday morning, all eyes are U.S.-Canada trade relations after the Trump administration on Monday moved to impose a tariff on softwood lumber imports to the U.S. from its northern neighbor.

Here’s the Associated Press with the details:

The president announced the decision during a gathering with conservative media outlets at the White House Monday evening. Trump’s initial comments were relayed by four people who were in the room and confirmed by an administration official.

On Twitter, Breitbart News White House correspondent Charlie Spiering quoted Trump as saying, “We’re going to be putting a 20% tax on softwood lumber coming in — tariff on softwood coming into the United States from Canada.”

The Commerce Department later announced it had reached a preliminary determination and would impose countervailing duties ranging from 3 percent to 24 percent on imported softwood lumber, with an average of about 20 percent.

One person in the room said Trump threatened that dairy could be next.

The Washington Post added that U.S. Commerce Secretary Wilbur Ross said, “What we are doing is dealing with another bad act on the part of the Canadians.”

A report from Bloomberg News on Tuesday outlined the history of this dispute, which dates back to the 1980s. A looming impact on the U.S. economy is that rising lumber costs — softwood lumber includes wood made from trees with cones, like spruces, pines, and firs and is mostly used in homebuilding — crimp the recovering U.S. housing market, which still remains undersupplied as prices rise to pre-crisis levels.

This dust-up with Canada also comes as the Trump administration approaches Wednesday’s self-imposed deadline on unveiling a plan for tax reform, which will reportedly see corporate rates cut to 15% from the current level of 35%.

As we wrote on Monday, reports also indicated that President Trump wants to emphasize tax rate reductions over remaining deficit neutral, a shift that — if it comes to pass — would represent Trump moving away from Republican orthodoxy and be a potentially bullish signal for markets eager for more action out of Washington, D.C.

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland

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