US stocks climbed more than 2 per cent overnight as data showing the biggest monthly jump in consumer confidence in six years lifted hopes of an economic rebound, and a brokerage upgrade of Apple Inc drove sharp gains on the Nasdaq.
Apple's shares closed almost 7 per cent higher after Morgan Stanley said the iPhone will drive strong earnings growth over the next two years and raised its price target on the stock.
The rise on the US market points to a positive day for the Australian share market, which has been trading without a lead from its single biggest influence - Wall Street - for the past two trading sessions. This morning, the SPI futures index was up 64 points at 3841.
The Australian dollar's upward trajectory continued overnight, with the currency buying 78.6 US cents from yesterday's notional close of 77.65 US cents and the Reuters Jefferies index of commodity prices had risen 0.55% to 245.44 in offshore trade.
An index of US consumer confidence surged in May, strongly topping expectations as it registered the biggest monthly jump since April 2003, according to the Conference Board, an industry group.
Consumer discretionary shares were among the top gainers on the Dow and S&P 500, with McDonald's Corp up 3.1 per cent, retailer Macy's Inc up 5.9 per cent and the S&P consumer discretionary index up 3.8 per cent.
"Today the market is celebrating the return of some sign of consumer confidence," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey. "It was so strong, even the dismal housing numbers couldn't" bring the market down.
The news influenced the broad market, but consumer discretionary, restaurants and even Apple shares received the biggest boost, he said. "It's all the same script," Kenny said.
Other data on Tuesday showed prices of single-family homes fell in March from a year earlier. The pace of decline, however, slowed for a second consecutive month.
The Dow Jones industrial average rose 196.17 points, or 2.37 per cent, to finish at 8473.49. The Standard & Poor's 500 Index was up 23.33 points, or 2.63 per cent, at 910.33. The Nasdaq Composite Index was up 58.42 points, or 3.45 per cent, at 1750.43.
Consumer spending accounts for roughly two-thirds of the US economy. The US confidence data followed similarly rosy consumer reports in Germany and France.
The data also seemed to outweigh geopolitical concerns over North Korea's latest nuclear and missile tests, which pressured stocks at the open.
The market's gains came after four straight days of losses that marked the Dow's longest losing streak since the five days ended March 3. Worries about a possible cut to the United States' credit rating on Friday had pressured stocks.
On the Nasdaq, Apple shares gained 6.8 per cent to close at $US130.78. On the New York Stock Exchange, McDonald's shares were up 3.1 per cent at $US58.84 and Macy's shares were up 5.9 per cent at $US11.85.
Homebuilder DR Horton's shares rose 5.1 per cent to $US9.47.
Trading was active on the New York Stock Exchange, with about 1.37 billion shares changing hands, below last year's estimated daily average of 1.49 billion, while on Nasdaq, about 2.09 billion shares traded, below last year's daily average of 2.28 billion.
Advancing stocks outnumbered declining ones on the NYSE by 5 to 1 while advancers beat decliners on the Nasdaq by about 7 to 2.
Reuters
