U.S. stocks gain after consumer confidence data; Dow up 0.25%

Investing.com - U.S. stock markets advanced in quiet post-Christmas action on Tuesday, as market sentiment improved after data showed U.S. consumer confidence rose to an eight-month high in December.

During early U.S. trade, the Dow Jones Industrial Average rose 0.25%, the S&P 500 index gained 0.3%, while the Nasdaq Composite index added 0.4%.

With most investors already away on year-end leave, trading volumes were expected to remain low, resulting in subdued trade. U.S. equity markets remained closed on Monday due to the Christmas holiday.

Stock indices added to gains after the Conference Board said its index of consumer confidence rose to 64.5 in December from a reading of 55.2 in November. Analysts had expected the index to rise to 58.2.

Meanwhile, shares in department store operator Sears Holdings plunged 20.3% after announcing plans to close 100 to 120 Kmart and Sears stores, citing lower sales, continued margin pressure and expense increases. The company will take fourth-quarter charges of USD1.6 billion to USD2.4 billion as a result.  

In the eight weeks to Christmas Day, sales at Kmart fell 4.4% and by 6% at Sears. Both chains have reported a decline in demand for consumer electronics, amid fears of another U.S. recession. The firm has nearly 2,200 Kmart and Sears stores across the U.S.

Shares in retailers were mixed after the National Retail Federation said that U.S. holiday season retail sales were expected to rise 3.8% to a record USD469.1 billion. While the figure was slower than last year's growth, it was stronger than its pre-season forecast.  

Online retail giant Amazon added 0.6%, department store chain Macy’s dipped 0.4%, while electronics retailer RadioShack fell 1.6%.

Financial sector stocks were weaker amid ongoing concerns over the threat of mass credit ratings downgrades for euro zone countries.

Bank of America saw shares fall 0.9%, investment bank Morgan Stanley slumped 0.9%, while U.S.-listed shares of French lender Societe Generale dropped 2.1%.

Ratings agency Standard & Poor's has yet to announce if it will cut ratings on any of the 15 countries it has on credit watch negative. Two independent European government sources said Friday that S&P was not expected to release its verdict on euro zone debt ratings until January.  

Meanwhile, investors were eyeing Italian three and ten-year bond auctions later this week. The yield on Italy’s ten-year bonds rose to as high as 7.13% in early European trade, topping the critical 7% threshold widely viewed as unsustainable in the long-term.

Across the Atlantic, European stock markets were higher in thin trade, with markets in London remaining closed for an extended holiday break. The EURO STOXX 50 eased up 0.1%, France’s CAC 40 edged 0.25% higher, while Germany's DAX added 0.35%.

Earlier in the day, Standard & Poor’s with Case-Shiller said its house price index fell at an annualized rate of 3.4% in October, disappointing expectations for a 3.2% decline.

U.S. home prices in September fell by 3.5%, after being revised from a previously reported 3.6% decline.