Good News on Home Sales Boosts Stocks
A pair of encouraging reports about the housing market gave U.S. stocks a small 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 had reported that construction of new single-family homes in August also occurred at the fastest rate 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 19 cents, or 5 percent, to $3.72; 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 morning, the Dow Jones industrial average was up just 51 points.
The housing numbers "are fantastic news," said JJ Kinahan, chief derivatives strategist for TD Ameritrade, a retail brokerage, but traders continue to worry about recent discouraging signals like downgrades of railroads and a warning from Federal Express this week that the global economy is slowing.
"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 was up 45 points at 13,609 as of 11:30 a.m. EDT. The Standard & Poor's 500 index rose four to 1,463. The Nasdaq composite index rose four to 3,181.
Materials and consumer discretionary stocks added the most among the industry groups in the S&P 500 index.
Earlier, Asian 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. European stocks closed mostly higher.
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 52 cents to $39.83 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.
(Copyright 2012 The Associated Press.)