Stocks soar as investors reassured
EmptyNEW YORK -- Stocks surged Tuesday on signs of resilience in the housing market and the U.S. consumer, with falling oil prices giving investors an extra reason to rally. The Dow Jones industrials gained more than 120 points.
The National Association of Realtors' index for pending sales of existing homes rose in February at a seasonally adjusted annual rate of 0.7%. The index is well below where it was a year ago but stronger than investors expected, reassuring them that the housing sector, while weak, is not being pummeled by the struggling subprime mortgage sector.
Fears that lending problems will spill over into the rest of the economy have been a major factor behind the market's volatility of the past several weeks. The uptick in home sales was slight but came as a pleasant surprise to investors who had been bracing for the worst.
Other data Tuesday also suggested the American consumer is strong: A report from Redbook Research showed that consumers spent more at chain stores in March than they did in February, while Toyota Motor Corp. reported a steep increase in U.S. sales in March. Other vehicle sales reports issued Tuesday, though, showed that Toyota continues to outperform U.S. automakers.
A decline in crude oil prices, waning as tensions eased between Britain and Iran, also encouraged investors. High energy prices contribute to inflation, which can crimp spending and hurt the chance of lower interest rates.
According to preliminary calculations, the Dow rose 128.00, or 1.03%, to 12,510.30. The blue chip index is back in positive territory for the year, and 276 points below its record close of 12,786.64, reached Feb. 20.
Broader stock indicators also soared. The Standard & Poor's 500 index gained 13.22, or 0.93%, to 1,437.77, and the Nasdaq composite index added 28.07, or 1.16%, to 2,450.33.
Bonds were lower after the home sales data, with the yield on the benchmark 10-year Treasury note at 4.67%, up from 4.65% late Monday. The dollar rose against other major currencies and gold prices slipped.