US stocks rallied on Tuesday as crude oil futures ended down more than $2 a barrel a day after hitting a record high and a gauge of consumer confidence jumped to a three-year high, easing market concerns about profit growth and consumer spending.
The Dow posted its first positive day in seven sessions, helped by gains in shares of industrial companies that are benchmarks of the US economy. Industrial and aerospace conglomerate United Technologies Corp rose nearly 3 percent to $53.02 and diversified manufacturer 3M Co climbed about 2 percent to $77.10.
The Dow Jones industrial average jumped 114.85 points, or 1.12 percent, to end at 10,405.63. The Standard & Poor's 500 Index gained 10.88 points, or 0.91 percent, to close at 1,201.57. The technology-laced Nasdaq Composite Index advanced 24.69 points, or 1.21 percent, to finish at 2,069.89.
"The fact that oil prices fell today as energy traders took profits helped," said Peter Cardillo, chief market strategist at SW Bach & Co "No question that consumer confidence that surged in spite of higher energy prices is encouraging."
Advancers outnumbered decliners on both the New York Stock Exchange and the Nasdaq by about 3 to 1.
Volume was moderate, with 1.37 billion shares changing hands on the NYSE, below the 1.46 billion daily average for last year, while on Nasdaq, about 1.62 billion shares traded - below the 1.81 billion daily average last year.
US crude oil futures ended down more than $2 on Tuesday as traders took profits from a record high of $60.95, set the previous day in New York trading. Crude for August delivery fell $2.34 to settle at $58.20 a barrel.
The US consumer confidence index, which improved in May, climbed in June to a three-year high of 105.8 as consumers felt more optimistic about the labor market, according to a report from the Conference Board, a private research company.
The number is closely watched since consumer spending represents a large chunk of the US economy and the recent surge in oil prices has raised worries about a likely drop in consumer spending.
Shares of Dow component Wal-Mart Stores Inc, the world's biggest retailer, rose 1.9 percent, or 91 cents, to $48.43, after Tuesday's steep drop in crude futures prices. Lower oil prices are a relief to discount chains because the stores cater to lower-income shoppers who have to spend a larger portion of their budgets on gasoline when energy costs jump.
Tuesday's sharply lower oil futures prices also helped airline stocks, such as Delta Air Lines Inc, up nearly 13 percent, or 45 cents, at $3.97, and AMR Corp, the parent company of American Airlines, up 9.3 percent, or $1.04, at $12.25.
The Dow Jones Transportation Average, which includes Delta, AMR, and other airline and shipping company stocks, rose 2.5 percent.
"Another factor that helped the market rebound is that we did not get too many negative earnings announcements," Cardillo said.