Stocks extended a massive rally through to mid-afternoon Tuesday following signs the U.S. manufacturing sector was improving and as strength in car sales continued through February.
The S&P 500 was up 2.1%, the Dow Jones Industrial Average added 2%, and the Nasdaq gained 2.5%.
Investors' mood turned buoyant on Tuesday after manufacturing activity improved at a better-than-expected pace in February. Activity last month remained just shy of growth as a stronger U.S. dollar and weaker global demand continued to deter growth. The ISM manufacturing index hit 49.5 in February, up from 48.2 in January and better than an expected 48.5 reading.
"While still negative, production activity appears to be markedly less negative at the moment -- hardly a robust assessment but better than a sharp stick in the eye," said Lindsey Piegza, chief economist at Stifel. "Still facing the perfect storm from a heighten U.S. dollar, ample inventory overhang and tepid global demand, producers are still cutting back production, albeit at a slower pace than when the Fed opted to raise rates for the first time in December."
Construction spending in January climbed 1.5%, an eight-year high and far better than estimated 0.4% growth. Spending increased a meager 0.1% in December.
A separate read on the manufacturing sector in February showed activity cooling, though not as much as initially expected. Manufacturing activity in February fell to a reading of 51.3 in February, down from 52.4 in January, according to the final read on the U.S. Markit purchasing managers index. However, that was slightly above an initial reading of 51.
High-momentum tech names led Wall Street higher including industry giants Apple (AAPL - Get Report) , Amazon (AMZN - Get Report) , Alphabet (GOOGL - Get Report) , Microsoft (MSFT - Get Report) and Intel (INTC - Get Report) . The Technology Select Sector SPDR ETF (XLK - Get Report) added 2.5%.
Apple and Alphabet are holdings in Jim Cramer's Action Alerts PLUS portfolio.
Exclusive Look Inside:
You see Jim Cramer on TV. Now, see where he invests his money and why Apple is a core holding of his multi-million dollar portfolio.
Want to be alerted before Jim Cramer buys or sells AAPL? Learn more now.
The financials sector was also pulling in large gains on Tuesday, led by Bank of America (BAC - Get Report) , JPMorgan (JPM - Get Report) , Citigroup (C - Get Report) and Wells Fargo (WFC - Get Report) . The Financials Select Sector SPDR ETF (XLF - Get Report) rose 2.9%.
Bank of America and Wells Fargo are holdings in Jim Cramer's Action Alerts PLUS portfolio.
Consumers continued to purchase cars in February, even as overall confidence in the economy faltered. Ford (F - Get Report) reported a massive 20.4% surge in unit sales last month, rocketing past estimates of 12% growth. Fiat Chrysler (FCAU - Get Report) posted a 12% increase in February sales, its seventy-first month of sales growth.
However, General Motors (GM - Get Report) missed February sales estimates by a wide margin. The Detroit automaker reported a 1.5% decrease in sales to 227,825 units. Consensus was for sales growth anywhere between 3% to 8%.
Tesla (TSLA - Get Report) shares plummeted more than 4% in late-afternoon trade after Citron Research announced a short position on the automaker. Tesla shares are down more than 20% since the beginning of the year.
China's central bank made more moves to support its economy on Monday after cutting the amount banks are required to hold on reserve. The People's Bank of China cut the reserve requirement by half a percentage point. This marks the fifth time it has cut its reserve requirement in a year. China's stock market didn't have a chance to react to the news with the announcement made late on Monday. China's Shanghai Composite closed 1.8% higher on Tuesday.
Hopes for even more stimulus from the PBOC also spurred China's market rally. China's factory activity worsened in February to its worst level since November 2011, another sign of a significant slowdown in the world's second-largest economy. China's purchasing managers' index fell to 49, indicating a contraction, while its nonmanufacturing PMI read fell to 52.7, its worst growth since late 2008.
Crude oil bounced back to positive territory on Tuesday, reaching a two-month high. The commodity had a solid start to the week on high hopes over an agreement between Russia and members of the Organization of Petroleum Exporting Countries over a production freeze. Saudi Arabia voiced its support for cooperation to stabilize prices on Monday. West Texas Intermediate crude was up 2% on Tuesday to $34.40 a barrel.
United Technologies (UTX - Get Report) shares fell 3% after Honeywell (HON - Get Report) announced it was ending its attempt to acquire the industrials company. Honeywell said United Technologies had shown "unwillingness to engage in negotiations." United Technologies had said a potential acquisition would be met with intense regulatory scrutiny.
Valeant Pharmaceuticals (VRX) slid 4%, adding to a steep decline a day earlier after confirming it is under investigation by the Securities and Exchange Commission. The new investigation is separate from an ongoing one into its purchase of Salix Pharmaceuticals last year. The company was already lower on Monday after withdrawing its financial guidance.
Barclays (BCS) fell 7% after more than halving its dividend to 3 pence a share over the next two years. The bank also announced plans to sell parts of its 62% stake in Barclays Africa with the aim of separating it from its accounts in at least two years. The bank reported a far-wider loss in fiscal 2015 than a year earlier.
Autozone (AZO) shares jumped more than 1% as quarterly sales continued to rise and profit jumped 8% from a year earlier. The car parts retailer reported profit of $7.43 a share, above estimates of $7.28, while revenue rose 5.3% to $2.26 billion. Sales at domestic stores climbed 3.6%.
Dollar Tree (DLTR - Get Report) fell after reporting disappointing sales growth. The discount retailer more than doubled its sales to $5.27 billion, though that came in below estimates of $5.41 billion. The company expects first-quarter earnings between 75 cents and 83 cents a share, on the low-side compared to consensus of 83 cents.
Marathon Oil (MRO - Get Report) slumped after unveiling a new share offering of 135 million common shares, plus an underwriters' option worth up to 20.25 million shares. The oil company plans to use proceeds to bolster its balance sheet. Oil companies have been struggling in a tough commodities market with major miner BHP Billiton (BHP) and NRG Energy (NRG - Get Report) cutting their dividends in recent days.
Intercontinental Exchange (ICE - Get Report) shares were on watch after it said it was considering an offer for the London Stock Exchange Group, only days after news of a possible $28 billion merger with Deutsche Böerse. ICE, which owns the New York Stock Exchange, has yet to make a decision as to whether it will pursue an offer.