U.S. Stocks Rally as April New Home Sales Jump Well Above Estimate

U.S. stock indices rallied on Tuesday, following their European counterparts. Dow Jones futures added over 190 points with Goldman Sachs contributing the most to the gains as nearly all stocks in the average rose. Financials traded more than 1 percent higher to lead all S&P 500 sectors higher.

June U.S. Dollar Index futures also posted a gain. The market is now trading at levels not seen since late March. The EUR/USD plunged to its lowest level since March 28, reaching 1.1150 after the release of a weak ZEW survey. A Euro Zone economic sentiment index also fell to 6.4 points.

The GBP/USD was at its highest level since May 19, boosted by a new poll which showed support for Britain remaining in the European Union at 55 percent, while that for Brexit was at 42 percent.

Commodity-linked currencies fell on Tuesday.  The AUD/USD and NZD/USD both weakened on renewed talk about interest rate cuts in their respective countries. The USD/CAD was boosted by lower oil prices and increased expectations of a Fed rate hike in June.

The stronger U.S. Dollar pressured August Gold futures to its lowest level in 3 ½ weeks. Hawkish comments from Federal Reserve officials in the previous session sent the dollar to a two-month high against a currency basket.

Gold is down nearly 4 percent in May, driven lower by the recent Fed minutes which suggest a rate hike in June or July is a strong possibility.

July crude oil futures rebounded after falling for a fifth consecutive day early Tuesday. A stronger dollar and rising production were responsible for the early weakness. Short-covering ahead of today’s American Petroleum Institute’s weekly report and tomorrow’s U.S. Energy Information Administration’s weekly inventories report, underpinned the market. Both reports are expected to show that crude oil stockpiles fell during the previous week.

According to Reuters, the EIA report is expected to show U.S. commercial crude stocks likely fell by around 2.5 million barrels to 538.8 million in the week-ended May 20.

In economic news, U.S. new home sales for April jumped to 619,000, well above expectations. According to the Commerce Department, new home sales rose 16.6 percent to a seasonally adjusted annual rate of 619,000 units, the highest level since January 2008. The percent increase was the largest since 1992.

March’s sales pace was revised up to 531,000 units from the previously reported 511,000 units. Traders had forecast new home sales to rise only 523,000 last month.