DOW RALLIES BACK ABOVE 17,000: Here’s What You Need To Know

MYLES UDLAND

 OCT. 29, 2014

REUTERS/Brendan McDermid

Traders watched stocks go higher on Tuesday.

Stocks staged a huge rally on Tuesday, with the Dow regaining the 17,000 level and the Nasdaq leading percentage gains among the major averages. The small-cap Russell 2000 was the day’s biggest winner, gaining 2.6%. The rally on Wall Street came ahead of Wednesday’s monetary policy announcement from the Fed, at which the Fed is expected to announce the end of its quantitative easing program.

First, the scoreboard:

• Dow: 17,005, +187, (+1.1%)
• S&P 500: 1,985, +23, (+1.2%)
• Nasdaq: 4,564, +78, (+1.7%)
• Russell 2000: 1,148, +31, (2.8%)

And now, the top stories on Tuesday:

1. We got a number of pieces of economic data on Tuesday, including the Conference Board’s latest Consumer Confidence survey which showed consumer confidence is at a seven-year high. The report jumped to 94.5 from 89.0 in September, marking the best reading since October 2007 and higher than the 87.0 expected by economists. “A more favorable assessment of the current job market and business conditions contributed to the improvement in consumers’ view of the present situation,” said Lynn Franco of the Conference Board. 

2. Two pieces of housing data came in on Tuesday, with the August S&P/Case-Shiller home price index showing prices fell 0.2% month-on-month in August, but still rose 5.6% over the prior year, which was roughly in-line with expectations. Following the report, David Blitzer of S&P Dow Jones Indices said, “The deceleration in home prices continues. The Sun Belt region reported its worst annual returns since 2012, led by weakness in all three California cities — Los Angeles, San Francisco and San Diego. Despite weaker year-over-year numbers, home prices are still showing an overall increase, as the National Index increased for its eight consecutive month.” 

3. Data released from the Census Bureau on Tuesday showed that the homeownership rate fell to 64.4% in the third quarter of this year, down 0.9% year-over-year to the lowest level since first quarter of 1995. And while the story has often been that younger Americans are not buying home anymore, older adults have abandoned home ownership at a slightly higher rate.

4. Also in economic data, durable goods orders in September fell 1.3% over the prior month, missing expectations for a rise of 0.5%, while the Richmond Fed’s manufacturing index came in at 20 against expectations for a reading of 11 and up from last month’s 14. 

5. Among the big stock losers on Tuesday was Twitter, which fell 10% after the company last night reported results that were in-line with expectations. Following the report, analysts at RBC and Bank of America downgraded the stock, and as Business Insider’s Jay Yarow wrote, overall it is clear that analysts are worried about Twitter’s guidance, which suggests the social network could be looking at another weak quarter of user growth. Also in the social media sector, Facebook was expected to report earnings after the market close on Tuesday.

6. Chinese e-commerce giant Alibaba broke $100 for the first time on Tuesday, but failed to close above that level as the company, which made its debut the day after the S&P 500′s most recent all-time high, is set for its first earnings report as a public company next week. 

7. Another big equity mover was Madison Square Garden, which on Monday night announced that it would explore a plan to split itself in two, breaking into a sports and media company and an entertainment unit. Shares of the company rallied more than 10% following the announcement, which also included news that the company would add activist investor Nelson Peltz to its board of directors. 

8. Wednesday is Fed Day, and Business Insider’s Shane Ferro has the full preview here. Expectations are that the Fed will end its QE program on Wednesday, as the central bank has for a few meetings now signaled that if the economy continued to expand as expected, it would find the October meeting as the appropriate time to wind down this program. There has been a rash of “Fedspeak” since the Fed’s September meeting, with some Fed presidents suggesting that perhaps the Fed ought to consider putting off a full wind-down of its QE program considering some of the economic weakness out of Europe and the lack of inflation, particularly in wages, in the US. Business Insider will have full coverage of the announcement, which is set for tomorrow at 2:00 pm ET.