Wall Street begins 2nd quarter slightly higher
The stock market opened the second quarter with a solid advance after better-than- expected economic indicators bolstered optimism that the worst of the recession was over.
After falling in the early going Wednesday on disappointing jobs data, the Dow Jones industrials closed up 153 points on a rebound in pending home sales and an increase in a widely followed index of manufacturing activity.
Major stock gauges rose at least 1.5%.
The housing news boosted shares of banks struggling with bad mortgages.
Technology and energy stocks also carved out advances. As sentiment about the economy has improved, investors have been buying up industries they believe are likely to lead the country out of recession.
The Dow surged 152.68 points, or 2%, to 7,761.60, while the Standard & Poor’s 500 index climbed 13.21 points, or 1.7%, to 811.08, and the Nasdaq composite index gained 23.01 points, or 1.5%, to 1,551.60.
The Russell 2,000 index of smaller-company stocks rose 1.5%.
Advancing issues outnumbered decliners by more than 3 to 1 on the New York Stock Exchange.
Pending home sales rebounded in February from a record low, the National Assn. of Realtors reported, while the Institute for Supply Management’s index of manufacturing activity contracted in March, but slightly less than anticipated.
An S&P; index of 13 home builders climbed 2%. D.R. Horton jumped 4.4%, while Los Angeles-based KB Home posted a 2.8% increase.
“It’s hard to call it good data in a normal environment but it certainly looks like some of the . . . housing activity has at least stabilized,” said Stephen Massocca, managing director at Wedbush Morgan Securities. “That’s helping the market quite a bit here.”
Wednesday’s economic data weren’t all good. Private sector payrolls shrank by a more-than-expected 742,000 jobs in March, ADP reported, signaling a worse-than-anticipated report coming Friday from the Labor Department on the overall labor market last month.
The market’s advance occurred as world leaders gathered in London to discuss the slumping global economy. Amid speculation of discord among attendees over how to handle the crisis, British Prime Minister Gordon Brown said the countries in attendance were close to agreeing on a set of reforms.
Stocks also got a lift from remarks in London by Treasury Secretary Timothy F. Geithner, who said there were signs that financial markets were recovering.
Among the big gainers in the banking sector, Citigroup and JPMorgan Chase each jumped 5.9%. An S&P; index of financial stocks climbed 3.6%.
Overseas, key stock indexes rose 0.8% in Britain, 1.1% in Germany, 1.2% in France and 3% in Japan.
The Treasury bond market showed little change.
The yield on the benchmark 10-year Treasury note slipped to 2.65% from 2.68% late Tuesday. The yield on the three-month T-bill edged up to 0.22% from 0.21%.
The dollar was mixed against other major currencies. Gold advanced $3.50 to $926.10.
Oil prices fell after the government reported that U.S. crude stockpiles hit a fresh 15-year high last week as the recession kept a lid on consumption.
Gasoline inventories also rose, unexpectedly.
The gain in oil stockpiles left supplies 13% higher than the five-year average for the period, according to the Energy Department. Gasoline inventories were 2.7% above average.
“The tanks are brimming,” said Adam Sieminski, chief energy economist at Deutsche Bank in Washington. “The numbers today show there’s plenty of supply.”
Near-term oil futures fell as low as $47.26 a barrel during Wednesday’s trading session before ending down $1.27 at $48.39. The price has slumped from a four-month high of $54.34 on Thursday.
Average U.S. daily fuel consumption over the last four weeks was down 4.4% from a year earlier.
“We will need to see demand come back before there is any sustained rally in this market,” said Kyle Cooper, an analyst at energy consultant IAF Advisors in Houston. “At this point demand is still falling.”
