US stocks surge on home sales, oil dip

US stocks surged Tuesday on signs of resilience in the housing market, with falling oil prices contributing to the rally. The Dow Jones industrials gained more than 120 points.

By MADLEN READ, AP
April 4, 2007 07:20
4 minute read.

 
X

Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before. Nevertheless, traditional business models are no longer sustainable and high-quality publications, like ours, are being forced to look for new ways to keep going. Unlike many other news organizations, we have not put up a paywall. We want to keep our journalism open and accessible and be able to keep providing you with news and analyses from the frontlines of Israel, the Middle East and the Jewish World.

As one of our loyal readers, we ask you to be our partner.

For $5 a month you will receive access to the following:

  • A user experience almost completely free of ads
  • Access to our Premium Section
  • Content from the award-winning Jerusalem Report and our monthly magazine to learn Hebrew - Ivrit
  • A brand new ePaper featuring the daily newspaper as it appears in print in Israel

Help us grow and continue telling Israel’s story to the world.

Thank you,

Ronit Hasin-Hochman, CEO, Jerusalem Post Group
Yaakov Katz, Editor-in-Chief

UPGRADE YOUR JPOST EXPERIENCE FOR 5$ PER MONTH Show me later Don't show it again

US stocks surged Tuesday on signs of resilience in the housing market, with falling oil prices contributing to the rally. The Dow Jones industrials gained more than 120 points. The National Association of Realtors' index for pending sales of existing homes rose in February at a seasonally adjusted annual rate of 0.7 percent. The index is well below where it was a year ago but stronger than investors had been expecting, reassuring them that the housing sector, while weak, is not being pummeled by the struggling subprime mortgage sector. Fears that mortgage problems will spill over into the rest of the economy have been a major factor behind the market's volatility of the past several weeks, and so the uptick in sales came as a pleasant surprise. "That says people are getting mortgages, people are buying houses, people have incomes, jobs, all that good stuff," said Kim Caughey, equity research analyst at Fort Pitt Capital Group. "You'd never go out and buy a house if you think you're going to get laid off. Consumers are optimistic about the future, and as we all know, the consumer drives this economy." Consumers are apparently still buying cars, too, although sales reports issued Thursday showed that Toyota Motor Corp. again outperformed US automakers last month. Waning crude oil prices, declining as tensions eased between Britain and Iran, also encouraged investors. High energy prices contribute to inflationary pressures, which can crimp consumer spending and are an obstacle to lower interest rates. In midafternoon trading, the Dow rose 125.40, or 1.01%, to 12,507.70. The blue chip index is back in positive territory for the year, and about 280 points below its record close reached February 20. Broader stock indicators also soared. The Standard & Poor's 500 index gained 12.68, or 0.89%, to 1,437.23, and the Nasdaq composite index added 28.36, or 1.17%, to 2,450.62. Bonds were lower after the home sales data, with the yield on the benchmark 10-year Treasury note at 4.67%, up from 4.65% late Monday. The dollar rose against other major currencies, while gold prices were little changed. A barrel of light sweet crude dropped more than a dollar to $64.28 a barrel on the New York Mercantile Exchange. Prices had surged when 15 British sailors and marines were detained March 23 by Iran, but the two nations are in negotiations that appeared to be bringing the sailors closer to release. Airline stocks rocketed higher on the prospect of declining fuel costs, as well as a rise in Continental Airlines Inc.'s revenue per passenger. Continental Airlines rose $3.05, or 8.5 percent, to $39.10. UAL Corp., the parent company of United Airlines, rose more than 5%, and AMR Corp., the parent of American Airlines, also gained more than 5%. Homebuilders advanced after the rise in pending home sales. Pulte Homes rose 77 cents, or 2.9%, to $27.10; KB Home rose $1.23, or 2.9%, to $43.11; and Toll Brothers Inc. rose 68 cents, or 2.5%, to $27.89. The home sales data also boosted Home Depot Inc. The retailer rose 84 cents, or 2.3%, to $37.63. Meanwhile, March auto sales from showed weakness among US automakers but strength in General Motors Corp.'s China sales. Also, Toyota grabbed a huge chunk of US business, and is closing in on Ford to become the No. 2 automaker in US sales. Ford Motor Co., DaimlerChrysler AG, and GM all saw their US sales fall, but Toyota's US sales of cars and light trucks surged. GM rose 68 cents to $31.35; Ford rose 4 cents to $8.13; and Daimler Chrysler fell $1.03 to $82.99. Toyota's US shares rose 43 cents to $127.35. Advancing issues outnumbered decliners by more than 3 to 1 on the New York Stock Exchange, where volume came to 993.8 million shares. "I don't think we're out of the woods yet," said John O'Donoghue, co-head of equities at Cowen & Co., noting that some of the market's gains were probably due to frustrated traders short-covering, or buying back bets that prices would fall. "The market has exhibited a certain amount of complacency. We'll see how earnings come in." Investors are treading fairly optimistically toward the first quarter earnings season. So far, there have been a few profit warnings - notably from some homebuilders - but some investors had been bracing for more dire earnings preannouncements. "When economies are softer than anticipated, companies get a lot of negative surprises. It's way too early to say this definitely, but perhaps the economy isn't slowing as rapidly as envisioned," Caughey said. A positive outlook from Napster Inc. gave technology stocks an extra lift Tuesday. The on-line subscription service rose 17 cents, or 4.1%, to $4.32 after it said it expects to beat its fiscal fourth-quarter revenue guidance. The Russell 2000 index of smaller companies rose 8.58, or 1.07%, to 811.80. Japan's Nikkei stock average rose 1.27%. Britain's FTSE 100 rose 0.80%, Germany's DAX index rose 1.56%, and France's CAC-40 rose 1.18%.

Related Content

The Teva Pharmaceutical Industries
April 30, 2015
Teva doubles down on Mylan, despite rejection

By GLOBES, NIV ELIS