U.S. stocks closed higher for a fourth straight day Tuesday as the recent political turmoil weighing on equities eased in the wake of President Trump's absence as he continued his first trip abroad since taking office.
President Trump's trip abroad continued to offset the recent political turmoil that has engulfed his administration and caused many investors to doubt whether he would be able to deliver on pro-growth policies, culminating in the massive sell-off of US stocks last week.
He met with Palestinian President Mahmoud Abbas and with Israeli Prime Minister Benjamin Netanyahu ahead of a trip to Europe.
On the economic data front, better-than-expected services business activity offset manufacturing and housing data that fell short of expectations.
IHS Markit flash U.S. manufacturing purchasing managers index (PMI) fell to its lowest level in eight months with a reading of 52.5, while its services PMI soared to a four-month high with a reading of 54, which was above economists' forecasts. A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
In a separate report on Tuesday, the Commerce Department said sales of newly constructed homes fell in April to a seasonally adjusted annual rate of 569,000. That was below analysts' estimates of a drop to 610,000.
An ambitious White House budget proposal for next year was also in focus during the session as investors mulled over the White House's plan to cut federal spending by $3.6 trillion over the next 10 years.
Ahead of the release of Federal Reserve's minutes of its April meeting, scheduled for Wednesday, investors parsed comments from Minneapolis President Neel Kashkari. Kashkari said that while the U.S. economy is closer than it was in March to full employment, he is unsure "if we are there yet," and that the slower pace of core inflation amid a surge in employment is "concerning."
Federal Reserve Bank of Philadelphia President Patrick Harker is set to deliver a speech later in the day.
The Dow Jones Industrial Average closed at 20,937.83, up 0.21%. The S&P 500 closed 0.18% higher, while the Nasdaq Composite closed at 6138.71, up 0.08%.
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