Stocks closed with solid gains and near session highs Tuesday after seesaw trading linked to Italy's debt drama. The Nasdaq and S&P 500 tacked on 1.2%, after trading as much as 0.5% lower at midday. The NYSE composite rose 1.1%. Volume increased across the board from Monday's levels.
The market has bounced back since the sell-off of Oct. 31-Nov. 1. Two up days in that span of time came in higher volume. For the fifth straight day, indexes closed near session highs.
Meanwhile, leading stocks have displayed encouraging action. Sell signals remain rare and more breakouts are occurring.
The positive tone indicates that the pressure the market had faced recently has dissipated and its uptrend is back to normal.
Stocks started out higher, but dropped into the red around midday as a key vote in debt-wracked Italy sent a mixed signal. Italian Prime Minister Silvio Berlusconi lost his parliamentary majority, yet he still managed to win a key budget vote.
It initially wasn't clear what would happen to Berlusconi. But he then promised to resign after Italian lawmakers approve new austerity measures. Once the news hit the wires, U.S. stocks went into the black and to new session highs.
The S&P 500 finished above its 200-day moving average, after closing below that long-term support level for six straight days.
Advancers easily beat out decliners on both the Nasdaq and NYSE. But while new 52-week highs outnumbered new lows Tuesday on the NYSE, slightly more stocks made new lows on the Nasdaq than new highs.
Top-rated stocks largely acted well, with several breaking out.
Cardtronics (CATM) jumped 8% in big trade, clearing a 25.95 handle buy point in the wake of a strong quarterly earnings report late Monday. TransDigm Group (TDG) rose 4% and flew past a 95.14 buy point from a cup without handle.
Signet Jewelers (SIG) climbed 8% in huge volume, topping a 45.60 handle entry. Late Monday, S&P said Signet will join the S&P MidCap 400 index. Priceline.com (PCLN) surged 9%, closing above an area of resistance around 550.
On the downside, Triumph Group (TGI) slid 2% in fast trade, though it finished near its session high. Before the opening bell, it announced a public offering of 5 million shares.
After hours, Copa Holdings (CPA) reported third-quarter earnings that beat views. The stock, which has been working on a new base, fell 4% in strong volume during the regular session.
U.S. economic news was light Tuesday and mostly overshadowed by the latest euro zone headlines. A small-business optimism index edged up in October.
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