Good housing numbers lift stocks
Stocks rose Wednesday after the release of two encouraging housing reports. Stocks of homebuilders rose sharply while the gains for broader stock indexes were muted.
| New York
A pair of encouraging reports about the housing market gave U.S. stocks a little boost Wednesday.
Home sales jumped to the highest level in more than two years in August, the National Association of Realtors said. Sales rose 7.8 percent to a seasonally adjusted annual rate of 4.82 million, the most since May 2010.
Earlier, the government reported that construction of single-family homes in August also was the fastest in more than two years.
Stocks of homebuilders, already up after the construction report, rose sharply after 10 a.m., when the jump in home sales was reported. D.R. Horton Inc. rose 87 cents, or 4.1 percent, to $22.22; Beazer Homes USA Inc. rose 22 cents, or 6.2 percent, to $3.75; and KB Home rose 46 cents, or 3.6 percent, to $13.16.
The gains for broader stock indexes were muted. At its high for the day, the Dow Jones industrial average was up just 62 points.
The housing numbers "are fantastic news," but traders continue to worry about recent discouraging signals this week like downgrades of railroads and a warning from Federal Express that the global economy is slowing, said JJ Kinahan, chief derivatives strategist for TD Ameritrade, a retail brokerage.
"The market is at a bit of a conundrum," Kinahan said. "There are just constantly these mixed signals about what's going on."
The Dow closed up 13.32 points, or 0.1 percent, at 13,577.96. The Dow is just a 4 percent rally shy of its all-time high of 14,164, reached Oct. 9, 2007.
The Standard & Poor's 500 index rose 1.73 points, or 0.1 percent, to 1,461.05. Telecom and consumer discretionary stocks added the most among the industry groups in the S&P 500 index.
Energy stocks suffered as the price of oil fell $3.31, or 3.5 percent, to $91.98 per barrel. Traders are questioning whether economic growth is strong enough to justify a recent run-up to $100 per barrel. Crude is down 7 percent this week.
The Nasdaq composite index rose 4.82 points, or 0.2 percent, to 3,182.62.
Earlier, Asian and European markets closed higher after the Bank of Japan announced a massive asset purchasing plan similar to what the Federal Reserve approved last week. Japan's main stock index hit a four-month high.
The yield on the 10-year Treasury note fell to 1.78 percent from 1.81 percent late Tuesday as demand for safe investments increased. A bond's yield falls as its price rises.
In corporate news, Cracker Barrel leapt $3.69, or 5.8 percent, to $67.31, after the purveyor of country cooking and homespun curios said it doubled its net income in the fiscal fourth quarter.
General Mills rose 71 cents, or 1.8 percent, to $40.02 after saying its fiscal first-quarter net income increased 35 percent on strong foreign yogurt sales.
AutoZone Inc. jumped $12, or 3.4 percent, to $369.84 after saying its fiscal fourth-quarter net income rose 7.4 percent on strong sales at new stores.