The S&P 500 gained 0.5% on Tuesday, although it ran into some resistance at its 200-day moving average (2741.76) during the session. The Dow Jones Industrial Average gained 0.7%, the Nasdaq Composite gained 0.7%, and the Russell 2000 gained 0.2%.

The S&P 500 information technology (+0.9%) and consumer discretionary (+1.0%) sectors were consistent leaders throughout the session, which contributed to an early risk-on trading mentality that helped lift the benchmark index near its 200-day moving average.

The key technical level provided the broader market with some resistance, as the S&P 500 coughed up its gains and returned to its flat line around 1:00 p.m. ET.

Investors were undeterred and bought the dip, which was indicative of a trend that has helped the stock market bounce the way it has from its Dec. 24 low.

Strikingly, the rebound effort coincided with Alphabet (GOOG 1145.99, +13.19, +1.2%) swinging into positive territory for the first time. 

Alphabet was down as much as 1.6% intraday following its earnings report. The company delivered some solid growth in the fourth quarter, but a contraction in its operating margin and a 29% year-over-year decline in cost per click invited some profit taking interest.

Investors regrouped, though, with renewed buying interest driving the stock, which helped the communication services sector (+0.9%) close near session highs. 

The S&P 500 closed near its session high, finishing just below its 200-day moving average ahead of tonight's State of the Union speech from President Trump.

The heavily-weighted financials (-0.1%) and health care (-0.1%) sectors did not provide much support for the broader market.  The former was pressured by weakness in the bank stocks, which lagged as the yield curve flattened a bit, while the latter was weighed down by the specter of the president pushing the need to reduce drug prices and health care costs in tonight's speech.

Some story stocks from Tuesday included Ralph Lauren (RL 124.16, +9.61, +8.4%) and Estee Lauder (EL 152.02, +15.85, +11.6%), both of which impressed investors with strong earnings reports and/or guidance. On the downside, Church & Dwight (CHD 60.46, -4.91, -7.5%) and Archer-Daniels (ADM 41.85, -2.64, -5.9%) disappointed investors with their results.

U.S. Treasuries edged higher, pushing yields lower across the curve. The 2-yr yield decreased one basis point to 2.52%, and the 10-yr yield decreased two basis points to 2.70%. The U.S. Dollar Index increased 0.2% to 96.03. WTI crude lost 1.6% to $53.75/bbl.

Reviewing Tuesday's sole economic report, the ISM Non-Manufacturing Index for January:

• The ISM Non-Manufacturing Index checked in at 56.7% for January (Briefing.com consensus 57.0%), down from an upwardly revised 58.0% (from 57.6%) in December. The dividing line between expansion and contraction is 50.0%. Accordingly, the non-manufacturing sector expanded in January, but at a slower pace.
  • The key takeaway from the report is that non-manufacturing sector activity slowed in the face of concerns about the partial government shutdown, yet respondents reportedly remain mostly optimistic about overall business conditions. According to the ISM, the past relationship between the non-manufacturing index and the overall economy indicates the January reading corresponds to a 2.8% increase in real GDP on an annualized basis.

Looking ahead, investors will receive the Trade Balance report for November, the preliminary readings for Q4 Productivity and Unit Labor Costs, and the weekly MBA Mortgage Applications Index on Wednesday.

• Russell 2000 +12.7% YTD
• Nasdaq Composite 11.6% YTD
• S&P 500 +9.2% YTD
• Dow Jones Industrial Average +8.9% YTD