Wall St. extends gains on strong housing report
Stocks pushed higher for a third straight session after a surprisingly strong report on home sales bolstered the view that the economy is picking up speed.
The Dow Jones industrial average rose nearly 51 points, bringing its three-day gain to 156 points. The Standard & Poor’s 500 index closed at a fresh 14-month high, while the Nasdaq composite index ended at its highest level in 15 months.
Stocks got off to a positive start after the National Assn. of Realtors said home resales jumped 7.4% in November to their highest level in nearly three years. The better-than-expected increase was attributed to a government tax break that has since been extended.
The report added to a recent string of encouraging economic and corporate reports.
“It’s just another rung in the recovery ladder,” said Brett D’Arcy, chief investment officer at CBIZ Wealth Management Group.
Confident investors again pushed Treasury yields up sharply and gave the dollar its eighth consecutive daily gain.
The markets, meanwhile, shrugged off the Commerce Department’s report that the U.S. economy grew at an annual rate of 2.2% in the third quarter, down from the previous estimate of 2.8%.
The Dow climbed 50.79 points, or 0.5%, to 10,464.93. The Standard & Poor’s 500 index rose 3.97 points, or 0.4%, to 1,118.02, while the Nasdaq composite index advanced 15.01 points, or 0.7%, to 2,252.67. The Russell 2,000 index of smaller companies jumped 0.8%.
About three stocks rose for every two that fell on the New York Stock Exchange, where volume was low.
Trading is expected to be light the entire holiday-shortened week. The market is scheduled to close early Thursday and remain shut Friday for Christmas.
In the Treasury market, the yield on the benchmark 10-year T-note climbed to 3.74%, its highest level since August, from 3.68% late Monday.
The gap between yields on short- and long-term bonds has widened to record levels, indicating that investors see the economy growing.
The dollar surged 2.5% against the euro as investors bet that the U.S. will recover faster than Europe’s economies will. Worries have been rising in recent weeks about debt levels in Greece, Ireland, Spain and Portugal, leading investors to sell other currencies and buy the dollar. On Tuesday, a third credit-rating firm downgraded Greece’s government bonds.
The stronger dollar helped push gold prices to their lowest levels since early November.
But oil reversed an early slide and finished unchanged at $72.47 a barrel in New York trading.
Builder stocks rose on the home-sales data. KB Home surged 6.9%.
In other market action, Valencia-based Mannkind tumbled 5.5% after an analyst predicted the drug firm would fail to win timely approval for its experimental inhaled insulin.
Overseas, key stock indexes rose 0.7% in Britain and France, and 0.3% in Germany. Japanese shares shot up 1.9%.