Friday, September 21, 2012

Encouraging reports about housing lift stocks

NEW YORK -- A pair of encouraging reports about the housing market pushed U.S. stocks back above four-year closing highs 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 had 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 86 cents, or 4 percent, to $22.21; Beazer Homes USA Inc. rose 22 cents, or 6 percent, to $3.75; and KB Home rose 39 cents, or 3 percent, to $13.09.

The gains for broader stock indexes were muted. At its high for the day, the Dow Jones industrial average was up just 62 points. Still, the index was on track for its highest close since December 2007, the start of the Great Recession.

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 rose 39 points to 13,603 as of 2:15 p.m. EDT. If the gain holds, it will be the Dow's highest close since Dec. 10, 2007, when it finished at 13,727. 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 gained three to 1,462, which would also be good for a four-year closing high. Telecom and consumer discretionary stocks added the most among the industry groups in the S&P 500 index.

The Nasdaq composite index rose six to 3,183.
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 $4.99, or 8 percent, to $68.61 after the purveyor of country cooking and homespun curios said it doubled its net income in the fiscal fourth quarter.
General Mills rose 81 cents, or 2 percent, to $40.12 after saying its fiscal first-quarter net income increased 35 percent because of yogurt sales overseas.

AutoZone Inc. jumped $10.51, or 3 percent, to $368.35 after saying its fiscal fourth-quarter net income rose 7.4 percent on strong sales at new stores.
Daniel Wagner can be reached at
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