Dow Jones gains 500 points, Nasdaq and S&P 500 rally as cyclicals lead

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Stocks built up notable gains on Tuesday as investors picked up bargains following the declines over the previous couple weeks. The broad-based rally took place as earnings season began to pick up steam.

The Dow Jones Industrial Average (DJI) rose about 500 points to notch a gain of 1.5%. Meanwhile, the Nasdaq Composite (COMP.IND) finished +2.2%, while the S&P 500 (SP500) ended +1.6%.

Looking at the day’s closing numbers, the Nasdaq led the major averages higher, climbing 287.30 points to end at 13,619.66. The S&P 500 advanced 70.52 points to 4,462.21. The Dow concluded trading at 34,911.20, a gain of 499.51 points.

Ten of the 11 S&P sectors finished higher. Consumer Discretionary led the way, with a jump of 2.9%. Communication Services and Real Estate both rose more than 2% as well. Energy was the only sector to finish lower.

After four weeks of extreme outflows from BofA clients, Consumer Discretionary saw inflows last week, making the case for bottoming of the sector. In addition, a dearth of bullish sentiment is flashing a contrarian buy signal, BofA says.

The 30-year Treasury yield traded above 3% for the first time since 2019 and spent the session hovering around that level. The 10-year yield rose 8 basis points to 2.94% and the 2-year jumped 13 basis point to 2.59%.

The short end of the curve got a boost when March housing starts and building permits rose unexpectedly, easing some worries about a cooling housing market.

But starts “have historically been unresponsive to changes in mortgage rates in a supply-constrained environment, likely because homebuilders are able to continue building with little fear that homes will sit vacant after completion,” Goldman Sachs said.

“More groundbreaking means more homes for a supply constrained market,” Odeta Kushi, economist at First American, tweeted.

Also putting pressure on bond prices, St. Louis Fed President James Bullard said after the bell yesterday a 75-basis-point rate hike wasn’t out of the question but also said that it wasn’t his base case.

Looking to earnings, Lockheed Martin slid after missing on revenue, while J&J has showed strength after missing on the top line but also boosting its dividend.

Among other active stocks, Citizens Financial is among one of the highlighted S&P gainers after upbeat guidance. On the other hand, Dentsply Sirona is one of the major decliners after terminating its chief executive.