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Tech and consumer companies lead stocks higher

The stock market opened lower Tuesday after two days of losses but quickly recovered.
(Seth Wenig / Associated Press)
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U.S. stocks rebounded Tuesday and climbed after a survey showed consumer confidence is at a nine-year high, a sign Americans will keep spending in the months to come. Technology and consumer stocks made the largest gains.

The market opened lower after two days of losses but quickly recovered. The consumer confidence report gave major indexes a boost and they locked in a big gain by early afternoon.

Technology companies jumped, and solid results from cruise line operator Carnival pushed up travel-related companies. Energy companies slumped with oil prices as hopes for an international cut in fuel production faded.

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U.S. consumer confidence reached its highest level this month since August 2007, according to the Conference Board. The group said its index rose to 104.1 as consumers grew more optimistic about the labor market. The result was better than expected.

Katie Nixon, chief investment officer for Northern Trust, said it’s even more important right now because government spending, exports, and capital spending by businesses are all limited.

“Everything’s riding on the consumer right now,” she said. Recently investors have worried about consumer spending because of disappointing auto sales and retail sales.

The Dow Jones industrial average climbed 133.47 points, or 0.7%, to 18,228.30. The Standard & Poor’s 500 index ticked up 13.83 points, or 0.6%, to 2,159.93. The Nasdaq composite jumped 48.22 points, or 0.9%, to 5,305.71.

Economists had expected consumer confidence to fall in September. That’s partly because of disappointing reports on car and retail sales this month. Investors have been wondering if consumers would spend enough to keep the economy growing at a steady pace.

Travel companies made some of the biggest gains on the S&P 500 after Carnival reported a solid profit and strong revenue in the third quarter and raised its forecast for its full-year results. Carnival rose 4% to $48.35 while competitor Royal Caribbean advanced 4.8% to $74.35. Southwest Airlines climbed 4.5% to $38.54. Booking site Expedia went up 3.7% to $113.10.

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Amazon rose 2.1% to $816.11 as consumer stocks made big moves. Netflix, which has slumped this year after its stock doubled in 2015, regained 2.7% to $97.07. Microsoft helped pull tech stocks higher as it picked up 1.8% to $57.95. IBM advanced 1.8% to $156.77.

Oil prices fell after investors were disappointed again that OPEC countries didn’t make a deal to limit production. A representative for Iran said there probably won’t be any such agreement this week and that oil-producing nations should discuss the issue in November.

U.S. crude fell $1.26, or 2.7%, to $44.67 a barrel. The international standard, Brent crude sank $1.38, or 2.9%, to $45.97 a barrel in London. Oil prices had risen 3% on Monday. Devon Energy fell 3.2% to $38.38 and ConocoPhillips sank 1.5% to $39.43.

American Express rose 1.4% to $64.28. A federal appeals court ruled late Monday that the company didn’t violate antitrust laws by preventing stores from asking customers to use one credit card over another and steering consumers to another type of payment. On Tuesday, the company said it will buy back as much as 150 million shares of its stock and raised its dividend to 32 cents from 29 cents.

Oil and natural gas company Rice Energy fell 7.9% to $25 after it said it will buy Vantage Energy for $2.7 billion including debt. Part of Vantage’s business is to become part of a separate Rice company called Rice Midstream Partners, and shares of that partnership rose 5.7% to $22.52.

Kite Pharma jumped 9.2% to $60.04 after the Santa Monica drug developer reported good results for an experimental lymphoma treatment.

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Amgen fell 1.1% to $171.63 after the Thousand Oaks biotechnology company said its cancer drug Kyprolis did not meet its goals in a study involving newly diagnosed patients.

Bond prices continued to rise. The yield on the 10-year Treasury note fell to 1.56% from 1.58%. Bond yields have been slipping for more than a week as investors waited for the Federal Reserve to make a decision on interest rates. Last Wednesday the Fed announced it was leaving rates where they are for now.

Corrections Corp. of America slumped 7.4% to $14.78 and Geo Group slid 3.8% to $23.68 after Democratic candidate Hillary Clinton said during the presidential debate Monday night that states should stop doing business with private prisons. In August the federal government said the Justice Department would stop doing business with those prison companies.

Chesapeake Energy fell 5.9% to $6.23 after another sign that activist investor Carl Icahn is reducing his involvement with the oil and gas company. Chesapeake said two directors resigned from its board. One of them, Vincent Intrieri, is a longtime associate of Icahn. Earlier this month Icahn cut his stake in the company to 4.6% from 9.4%.

Gold fell $13.70, or 1%, to $1,330.40 an ounce. Silver fell 43 cents, or 2.2%, to $19.17 an ounce. Copper fell 3 cents to $2.17 a pound.

The dollar fell to 100.27 yen from 101.34 yen. The euro slid to $1.1221 from $1.1255.

France’s CAC-40 slipped 0.2% while Germany’s DAX fell 0.3%. The FTSE 100 index of leading British shares was down 0.2%. Hong Kong’s Hang Seng index rose 1.1% and Tokyo’s Nikkei 225 gained 0.8%. Seoul’s Kospi advanced 0.9%.

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Heating oil declined 4 cents, or 2.7%, to $1.41 a gallon. Wholesale gasoline fell 1 cent to $1.39 a gallon and natural gas remained at $3 per 1,000 cubic feet.

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UPDATES:

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2:40 p.m.: This article was updated with closing prices and additional information.

7:55 a.m.: This article was updated with more recent stock prices and additional information.

This article was originally published at 7 a.m.

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