Stocks open slightly higher after sharp drop
Better-than-expected retailer earnings and an upbeat housing report Tuesday sent major stock indexes up about 1% a day after a big market sell-off.
U.S. investors also took some cues from overseas exchanges, which got a boost from encouraging news about the German economy.
On Monday, the Dow Jones industrials tumbled 186 points, the most in six weeks, as investors focused on growing fears that consumers won’t spend enough to lift the economy into recovery.
The earnings reports released by retailers Tuesday showed that U.S. consumers remained shy about spending, but the results weren’t quite as bad as analysts had expected.
Meanwhile, the Commerce Department reported that construction of single-family homes rose 1% last month to the highest level since October 2008, marking the fifth straight monthly increase.
But construction of new homes overall, including apartments, fell more than expected.
The Dow rose 82.60 points, or 0.9%, to 9,217.94. The Standard & Poor’s 500 index gained 9.94 points, or 1%, to 989.67, while the Nasdaq composite index rose 25.08 points, or 1.3%, to 1,955.92.
The Russell 2,000 index of smaller companies jumped 1.5%.
About four stocks advanced for every one that declined on the New York Stock Exchange, where volume was light.
Overseas markets also rebounded from steep declines. Key stock indexes in Britain, Germany and France all added 0.9% after a research institute reported that consumer confidence was rising in Germany, Europe’s largest economy. Japanese stocks rose 0.2%.
On Wall Street, the rally was led by stocks that depend on a healthy economy, including financial, industrial and technology companies. Tech star Apple rose 2.8%.
In the financial sector, Bank of America added 2.1%, while JPMorgan Chase climbed 2.4%.
Among retailers, Home Depot jumped 3.1%. Its second-quarter profit fell 7% but topped expectations as cost cuts partly offset weak revenue. The home improvement retailer also lifted its full-year earnings forecast.
Target also posted earnings that surpassed the estimates of Wall Street analysts. Its shares surged 7.6%.
Oil prices advanced along with stocks. Crude futures jumped $2.44 to settle at $69.19 a barrel on the New York Mercantile Exchange.
