Related News

Home » Business » Finance

Stocks climb after home sales top expectations

INVESTORS are starting to believe that the U.S. stock market is on the verge of another big rally.

The Dow Jones industrials rose 103 points yesterday, their biggest point gain in five weeks. The day's economic news was tepid as the National Association of Realtors reported a drop in homes sales last month that wasn't as steep as forecast. But analysts said many investors, after seeing the Dow rising 15 out of the past 18 days, grew afraid of missing out on further gains.

The report on housing was typical of recent economic numbers that have been somewhat better than expected but still point to a weak economy. Sales of previously occupied homes fell 0.6 percent last month to an annual rate of 5.02 million. Analysts expected sales would fall 1 percent to 5 million units, according to Thomson Reuters.

For now, the sales numbers aren't disrupting hopes that the economy can recover even if there is only a slow stabilizing in the housing market. The Commerce Department is expected to report new home sales for February on Wednesday. A month ago, investors shrugged off an 11.2 percent drop in sales of new homes.

The market's continuing advance has been welcome but analysts are divided over whether stocks have run too far or if they have more to gain because of improvements in the economy. The recent gains have been mild in contrast to those of 2010 when triple-digit gains in the Dow were frequent as the index soared higher from a 12-year low.

Even many traders who have doubts about how solid the advance is, expect it to continue until something pops the optimistic mood.

"You can't deny the trend. Definitely the trend is higher," said Doreen Mogavero, president of brokerage Mogavero, Lee & Co. in New York. She said investors are optimistic about the health of corporate earnings for the January-March quarter.

"Things seem to be moving along in the right direction. So to that end I think people are feeling better."

But Mogavero is cautious because the advance has come in light trading volume, which signals that not many investors are willing to put money into the market.

The Dow rose 102.94, or 1 percent, to 10,888.83, a new high for 2010. The Dow is at its highest level since Sept. 26, 2008.

The Standard & Poor's 500 index rose 8.36, or 0.7 percent, to 1,174.17. It also stands at an 18-month high.

The Nasdaq composite index rose 19.84, or 0.8 percent, to 2,415.24, a 19-month high.

The rise in stocks sent bond prices lower and yields higher. The yield on the benchmark 10-year Treasury note rose to 3.69 percent from 3.66 percent late Monday.

The dollar rose against most other major currencies. Gold rose.

Crude oil rose 31 cents to US$81.91 per barrel on the New York Mercantile Exchange.

Stocks rose Monday after House lawmakers on Sunday approved a health care overhaul bill that will extend health insurance to 32 million Americans. Drug and hospital companies rose in part because of the prospect of increased demand.

Joe Saluzzi, co-head of equity trading at Themis Trading LLC, said the market has continued higher because traders don't want placing short-term bets, not because of strong belief that stock prices are too low. That makes the advance difficult to justify, he said.

"Look at the daily charts. They just grind higher. We call it the sausage factory. At the end of the day it tastes great but nobody knows how it's made," Saluzzi said.

Traders showed little reaction yesterday to Treasury Secretary Timothy Geithner's testimony before Congress about government efforts to overhaul mortgage financiers Fannie Mae and Freddie Mac. The pair, which were taken over by the government during the credit crisis, guarantee a majority of mortgages. The government's support has helped keep interest rates low as part of an effort to help the housing market recover.

Investors found some news about housing that they didn't like. Homebuilder KB Home fell 29 cents, or 1.7 percent, to US$17.15 after its fiscal first quarter loss was wider than expected and revenue fell short of forecasts.

More than two stocks rose for every one that fell on the New York Stock Exchange, where volume came to 985 million shares, compared with 954.3 million Monday.

The Russell 2000 index of smaller companies rose 7.39, or 1.1 percent, to 690.30.


Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend