Wall Street gains on positive housing data

NEW YORK:US stocks closed solidly higher Tuesday as investors weighed a positive report on the troubled housing market, a mixed batch of corporate earnings and progress on the government’s stimulus plan.

The Dow Jones Industrial Average surged 141.53 points (1.78 per cent) to finish at 8,078.36.

The tech-heavy Nasdaq composite climbed 21.87 points (1.46 per cent) to 1,516.30 and the broad Standard & Poor’s 500 index advanced 13.07 points (1.58 per cent) to 838.51.

The National Association of Realtors provided an unexpected glimmer of hope in the disastrous housing market: pending home sales rose 6.3 per cent in December. Most private economists had expected a flat reading.
“An unexpected jump in pending home sales is helping limit the sting of continued signs of carnage the recession is having on corporate profits and outlooks,” said analysts at Charles Schwab & Co.

Briefing.com analysts noted that roughly 80 per cent of pending home sales become existing home sales within two months. “This December report should factor favourably in economists’ forecast for existing home sales, particularly in January,” they said.

Joel Naroff of Naroff Economic Advisors said the data highlighted pent-up market demand for President Barack Obama’s stimulus plan, which has swelled to US$888 billion in the Senate.

“Since housing is the root of the problems, anything that helps turn around this market would be welcomed — hint, hint, Congress,” Naroff said.

The Federal Reserve announced Tuesday it had extended for six months, through October 30, temporary programs designed to inject liquidity into the financial markets.

The strongest gainer on the blue-chip Dow was drugmaker Merck, up 6.37 per cent at US$30.24, after reporting net profit doubled in 2008.

Motorola plunged 11.01 per cent to US$4.04. The troubled mobile phone maker posted a US$4.16 billion loss for 2008 under heavy restructuring charges.

By AFP