Stock market opens higher on hope for China
Stock market opened higher Tuesday amid optimism that China will take action to reverse the recent slowdown in its economic growth. Rising home prices also gave the stock market a boost.
New York — The stock market opened higher on Wall street Tuesday on optimism that China will take action to reverse the recent slowdown in its economic growth. Homebuilders rose on news that home prices rose for the first time in seven months.
It was enough to send markets higher in a month where the Dow Jones industrial average has risen on only four days.
The Dow on Tuesday was up 137 points at 12,592 after the first hour of trading. Caterpillar and Alcoa rose the most of the 30 stocks in the average.
China is the largest market for aluminum, which Alcoa makes, and Caterpillar recently said it is aggressively courting China to sell its construction equipment. The Dow is still down 5 percent for May and is headed for its first monthly loss since September.
U.S. markets were closed Monday for Memorial Day.
The Standard & Poor's/Case-Shiller report on home prices found that prices increased in 12 of the 20 cities it tracks. The increase in March from the month before was the first in seven months. It was the latest evidence of a slow recovery taking shape in the troubled housing market.
The news sent homebuilders higher. PulteGroup rose 3 percent, while Toll Brothers and Lennar rose over 1 percent.
Spain's banks are sitting on huge amounts of soured investments in the country's imploded real estate market. That has led to the recent nationalization of Bankia, the country's fourth-largest lender. Bankia revealed last week that it needs far more money in state aid than previously expected, $23.8 billion.
Madrid's Ibex index fell 1.7 percent. Bankia dropped another 11.4 percent. The yield on the benchmark 10-year government bonds, a key gauge of investor confidence in the country's ability to avoid bankruptcy, was slightly lower at 6.41 percent. The rate is perilously close to the 7 percent rate, which is widely seen as too high for a country to afford over the long term.
Oil prices were up a little less than one percent to $91.40. Crude has dropped from $106 four weeks ago amid signs of slowing global growth and optimism that a military conflict over Iran's nuclear capabilities could be avoided.
Energy companies were also gaining on expectations that China will need more energy to fuel its growth. Peabody Energy shot up 6 percent, Chesapeake Energy was up 5 percent, and Consol Energy gained 4 percent.
Other stocks that were making big moves:
— Williams-Sonoma rose 3 percent after an analyst for Janney Capital Markets upgraded the home goods retailer's stock, citing strong growth trends at the company's West Elm stores.
— ConocoPhillips rose over 2 percent after a Citi analyst said the company is likely to pay hefty dividends this year thanks to asset sales that generated higher returns than analysts expected.