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 Google <GOOG.O> rose 2.4 percent to $1,149.40, giving a large boost
to the outperforming Nasdaq, a day after the company announced plans
to acquire Nest Labs Inc. The $3.2 billion deal will give Google a
promising line of products and a prized design team.
Core U.S. retail sales increased 0.7 percent in December from the
prior month, flying past the 0.3 percent gain economists had
expected. Fourth-quarter economic growth prospects were further
boosted by a report showing retail inventories, excluding autos,
increased 0.6 percent in November.
The data followed Friday's payroll report, which showed job growth
for December that was sharply below expectations.
"Retail sales numbers for December sort of calmed everyone down,"
said Paul Mendelsohn, chief investment strategist at Windham
Financial Services in Charlotte, Vermont. "Numbers indicate the
economy is most likely moving forward at a nice pace despite an
errant jobs number last Friday."
The Dow Jones industrial average <.DJI> rose 115.92 points or 0.71
percent, to 16,373.86, the S&P 500 <.SPX> gained 19.68 points or
1.08 percent, to 1,838.88, and the Nasdaq Composite <.IXIC> added
69.712 points, or 1.69 percent, to 4,183.016.
Tuesday's gains came a day after the S&P 500 posted its largest drop
in two months, and market participants say they are gearing up for a
more volatile 2014 after a year that saw U.S. stocks constantly go
higher.
"We're seeing a good preview of what the year will bring, which is a
little bit more volatility," said Andres Garcia-Amaya, Global Market
Strategist at J.P. Morgan Funds.
The CBOE volatility index <.VIX> dropped 7.5 percent to 12.28 after
gaining 9.4 percent on Monday.
"We got accustomed to very low volatility and (a VIX reading of)
14-16 is not out of the question," Garcia-Amaya said.
Shares of General Motors <GM.N> jumped 3 percent to $41.20 in
extended trading after the company said it will pay the first
quarterly dividend on its common stock in almost six years.
Intel Corp <INTC.O> shares jumped 4 percent to close at $26.51 in
regular trade after JPMorgan upgraded the stock to "overweight" from
"neutral."
Electric car maker Tesla <TSLA.O> said deliveries of its Model S
sedan in the fourth quarter blew past its forecast, sending shares
up 15.7 percent to $161.27.
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Both JPMorgan Chase & Co <JPM.N> and Wells Fargo & Co <WFC.N> posted
earnings that beat expectations, though upside was limited with
Wells Fargo shares already near all-time highs and JPMorgan shares
at their highest since 2000. Shares of both banks rose less than 0.1
percent on the day.
With just 5 percent of the S&P 500 companies having reported
quarterly results, 53.8 percent have beaten earnings expectations,
according to Thomson Reuters data, below the 63 percent historical
average. About 62 percent have beaten on revenue, above the
long-term 55 percent average.
Bank of America Corp <BAC.N>, Citigroup <C.N>, Goldman Sachs <GS.N>
and Morgan Stanley <MS.N> will post results later in the week.
General Electric Co <GE.N> and Intel are also on tap.
Both GameStop Corp <GME.N> and Stratasys Ltd <SSYS.O> slumped after
giving outlooks that were weaker than expected. GameStop lost 19.9
percent to $36.31, while 3D printer maker Stratasys slid 8.2 percent
to $119.37.
In contrast, Intuitive Surgical <ISRG.O> advanced 6.8 percent to
$419.88 after the surgical equipment maker gave a strong
fourth-quarter outlook.
Charter Communications <CHTR.O> is trying to strike a deal to buy
Time Warner Cable <TWC.N> and sway its shareholders after three of
its offers have been rebuffed. On Monday, Charter took its approach
public and proposed paying $132.50 per TWC share.
TWC shares gained 2.7 percent to $136 and Charter added 2.3 percent
to $137.34.
Volume was roughly in line with the year-to-date average of about
6.5 billion shares traded on U.S. exchanges, according to data from
BATS Global Markets. Monday's sharp decline came in volume of 7.22
billion shares.
Advancing stocks outnumbered decliners on the NYSE by 12 to 5 and on
the Nasdaq three issues rose for every one that fell.
(Reporting by Rodrigo Campos; editing by
Nick Zieminski and Leslie Adler)
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