Stocks turn higher after housing report
MATTHEW CRAFT, AP Business Writer
NEW YORK (AP) — Just as investors were getting used to a steady diet of worrying news about the global economy, along came an encouraging report on the housing market.
The National Association of Realtors said Tuesday that Americans bought more previously owned houses in April. The median price surged 10 percent over the past year, the best gain since January 2006, before the real-estate bubble popped.
The report sent homebuilders stocks climbing and helped turn most stocks higher. Facebook's stock, however, continued to slump.
The Dow Jones industrial average rose 46 points to 12,551 as of 2:30 p.m. Eastern. JPMorgan Chase, which has been hammered since disclosing a $2 billion-plus trading loss, gained 5 percent on Tuesday, making it the Dow's leading stock.
Stock indexes had wavered between gains and losses before the housing report came out. The realtor group said sales of previously occupied homes rose 3.4 percent last month to an annual rate of 4.62 million, more than economists had predicted. The median price rose to $177,400.
"Existing home sales is one of the most important indicators for the housing market," said Dan Greenhaus, chief global strategist at the brokerage BTIG. "The improvement in today's data, while not spectacular, is nonetheless encouraging."
In other trading, the Standard & Poor's 500 index rose 6 points to 1,322. The Nasdaq composite index, which had its biggest gain of the year on Monday, rose 4 points Tuesday to 2,851.
Homebuilders such as PulteGroup, Lennar and Hovnanian Enterprises shot higher. S&P's homebuilder index has gained 39 percent this year, versus 5.3 percent for the S&P 500 index.
In recent years, most analysts considered the housing market a drag on the overall economy. Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi, said Tuesday's report is more proof that housing is no longer an obstacle. It's "not just healing" he said, in a note to clients. Construction has now contributed to economic growth for two straight quarters.
Facebook's stock kept sliding, dropping 7 percent to $31.64. The social networking company has fizzled since its long-awaited initial public offering last week at $38. Facebook sank 11 percent on Monday, even as the rest of the stock market rallied.
Among stocks making big moves:
• Urban Outfitters jumped 7 percent, the biggest gain in the S&P 500. The retailer posted earnings late Monday that surpassed Wall Street analysts' expectations on record sales.
• Benihana soared 21 percent on news that the restaurant group's board agreed to a buyout from the private equity firm Angelo, Gordon & Co. Shareholders still need to sign off on the deal.
• Ralph Lauren rose 3 percent. The clothing company's quarterly earnings soared 29 percent, helped by strong sales and a lower tax rate. The company doubled its dividend to 40 cents per share.