Oil Drop, Confidence Rise Push U.S. Markets To Big Gains

New York, NY (AHN) - All three major indices soared more than 2 percent on Tuesday sparked by a boost in consumer confidence and a decline in oil prices.

The markets were modestly higher coming into the 10 a.m. ET release of July Consumer Confidence. However, they caught heavy buying interest when the index posted a reading of 51, topping the 50 economists had expected.

The Dow Jones Industrial average rose 266 points or 2.4 percent as all 30 Dow components finished Tuesday higher. Financial components Bank of America and JP Morgan were the largest percentage gainers in the group.

The broader S&P 500 added 29 points or 2.3 percent as nine out of 10 major economic sectors finished the session with a gain.

Tech was also strong as the Nasdaq composite rose 55 points or 2.45 percent. Semiconductor stocks were strong along with big tech names like Apple and Google. Crude oil fell $2.54 or 2.3 percent to $121.87 a barrel, representing a 7-week low and leading the energy sector to shed 0.8 percent on Tuesday.

On the flipside, the pull-back in energy prices sparked a rally in the airlines, up 11.4 percent, and the consumer discretionary sector, up 3.3 percent.

Financials were once again behind the bulk of the markets' move as the sector rose 7.5 percent. Of the 88 financial stocks in the S&P 500, only one was lower on Tuesday.

The push in financials was sparked in part by news out of Merrill Lynch that they sold a large portion of their troubled CDO portfolio for 22 cents on the dollar. The sale now places a market value on these securities enabling investors to place a floor on the amount they may cost financial institutions.

Weekly crude oil inventories will be reported during Wednesday's session at 10:35 a.m. ET.