Stocks up after home sales report
EmptyNEW YORK -- Wall Street advanced Tuesday, trying to rebound from a dismal start to 2008 as investors bet that new housing data will give the Federal Reserve more reason to cut interest rates.
The National Association of Realtors index that tracks pending U.S. home sales fell 2.6% in November, more than the market expected. The housing market has been the main drag on the economy recently, and one indicator the central bank is watching to gauge the likelihood of a recession.
The advance extended a rally that started Monday, when stocks closed mostly higher on hopes the Fed will continue its campaign of interest rate cuts to prevent the U.S. economy from slipping into a downturn.
Philadelphia Fed President Charles Plosser said in a speech that inflation remains a concern to the central bank. On Tuesday, gold prices surpassed their 1980 levels and reached a record above $875 an ounce, while oil prices resumed their climb. However, Plosser said the Fed remains open to further rate reductions.
Investors also appeared pleased by talk of corporate shakeups at Bear Stearns Cos. and Starbucks Corp. Starbucks announced late Monday it was replacing its CEO, while media reports said Bear Stearns chief executive James Cayne was also planning to leave his post.
The Dow Jones industrial average rose 69.34, or 0.54%, to 12,896.83.
Broader indexes also rose. The Standard & Poor's 500 index gained 13.40, or 0.95%, to 1,429.58, and the Nasdaq composite index added 25.70, or 1.03%, to 2,525.16.
Oil had slipped in the previous session to a two-week low on worries about the U.S. economy, but on Tuesday, light, sweet crude for February delivery rose $1.92 to $97.01 a barrel on the New York Mercantile Exchange.
Bond prices weakened as stocks rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.89% from 3.84% late Friday.
The dollar fell against most rival currencies, except the yen.
Investors will be watching Bear Stearns to see if the fifth-largest U.S. investment bank will announce the resignation of James Cayne as chief executive. He is expected to retain the chairman title, according to a report in The Wall Street Journal, and to be replaced by Bear Stearns President Alan Schwartz, a 57-year-old investment banker. Bear Stearns rose 79 cents to $77.04.
The report came after Starbucks Corp. -- the world's largest chain of coffee shops, which has seen sales plateau -- announced late Monday it replaced its chief executive officer with former CEO and Chairman Howard Schultz. Starbucks rose $1.64, or 8.9%, to $20.02.
KB Home, one of the nation's biggest builders of single-family homes, reported Tuesday that its fourth-quarter losses ballooned as sales slowed. The company also booked charges to write down unsold inventory.
KBHome fell 43 cents, or 2.4%, to $18.05.
Overseas, Japan's Nikkei stock average closed up 0.19%, and Hong Kong's Hang Seng index fell 0.25%. Britain's FTSE 100 fell 0.20%, Germany's DAX index added 1.08%, and France's CAC-40 rose 0.96%.