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Housing Data Helps Propel Markets Housing Data Helps Propel Markets
(about 1 hour later)
Wall Street had strong gains on Tuesday, fueled by new data showing a strengthening housing market in the United States and supportive comments from central banks around the world. Wall Street move higher on Tuesday, fueled by new data showing a strengthening housing market in the United States and supportive comments from central banks around the world.
In afternoon trading the Standard & Poor's 500-stock index rose 0.9 percent, and the Dow Jones industrial average gained 1 percent. The Nasdaq composite was 1.1 percent higher. In afternoon trading the indexes were off their highs for the day of more than 1 percent. The Standard & Poor's 500-stock index was 0.7 percent higher, and the Dow Jones industrial average gained 0.8 percent. The Nasdaq composite was 0.8 percent higher.
Markets were bolstered by a report that American home prices rose 1.1 percent in March, according to the Standard & Poor’s Case Schiller index. Analysts were looking for a rise of 1 percent. It was the biggest annual gain in nearly seven years, and a further sign that the strengthening housing recovery is providing a source of support for the economy.Markets were bolstered by a report that American home prices rose 1.1 percent in March, according to the Standard & Poor’s Case Schiller index. Analysts were looking for a rise of 1 percent. It was the biggest annual gain in nearly seven years, and a further sign that the strengthening housing recovery is providing a source of support for the economy.
Prices in the 20 cities jumped 10.9 percent year over year, beating expectations for 10.2 percent. It was the biggest increase since April 2006, just before prices peaked in the summer of that year.Prices in the 20 cities jumped 10.9 percent year over year, beating expectations for 10.2 percent. It was the biggest increase since April 2006, just before prices peaked in the summer of that year.
Further encouraging the market, data showed consumer confidence was the strongest in over five years in May.Further encouraging the market, data showed consumer confidence was the strongest in over five years in May.
Equities have been closely tethered to monetary policy, and major American indexes last week posting their first negative week since mid-April on lingering concerns that the Federal Reserve may scale back its stimulus measures sooner than expected.Equities have been closely tethered to monetary policy, and major American indexes last week posting their first negative week since mid-April on lingering concerns that the Federal Reserve may scale back its stimulus measures sooner than expected.
Both the Bank of Japan and the European Central Bank reaffirmed that their policies would remain in place. On Monday, when United States markets were closed for the Memorial Day holiday, an executive board member of the European Central Bank, Joerg Asmussen, said the policy would stay as long as necessary. On Tuesday, a Bank of Japan board member, Ryuzo Miyao, said it was vital to keep long- and short-term interest rates stable.Both the Bank of Japan and the European Central Bank reaffirmed that their policies would remain in place. On Monday, when United States markets were closed for the Memorial Day holiday, an executive board member of the European Central Bank, Joerg Asmussen, said the policy would stay as long as necessary. On Tuesday, a Bank of Japan board member, Ryuzo Miyao, said it was vital to keep long- and short-term interest rates stable.
Monetary stimulus from central banks has been a major contributor to Wall Street’s gains this year, lifting the S.&P. 500 more than 15 percent. Analysts have also cited earnings growth and relatively cheap valuations as reasons investors have used any market decline as a buying opportunity, helping lift both the S.&P. and Dow to a series of new highs. Last week, major American indexes posted their first negative week since mid-April on lingering concerns that the Federal Reserve may scale back its stimulus measures sooner than expected.Monetary stimulus from central banks has been a major contributor to Wall Street’s gains this year, lifting the S.&P. 500 more than 15 percent. Analysts have also cited earnings growth and relatively cheap valuations as reasons investors have used any market decline as a buying opportunity, helping lift both the S.&P. and Dow to a series of new highs. Last week, major American indexes posted their first negative week since mid-April on lingering concerns that the Federal Reserve may scale back its stimulus measures sooner than expected.
“Whenever the Fed starts slowing its stimulus, that will have an impact on markets, but there’s enough strength out of retail and housing that we can sustain our gains, especially with Japan making it very clear what its policy will be,” said Tad Hill, chief executive of Freedom Financial Group in Birmingham, Ala.“Whenever the Fed starts slowing its stimulus, that will have an impact on markets, but there’s enough strength out of retail and housing that we can sustain our gains, especially with Japan making it very clear what its policy will be,” said Tad Hill, chief executive of Freedom Financial Group in Birmingham, Ala.
Cyclical sectors, which are closely tied to the pace of economic growth, are likely to advance on any sign of continued supportive policies. Bank of America rose 1.8 percent while Citigroup was 1.9 percent higher. Cyclical sectors, which are closely tied to the pace of economic growth, are likely to advance on any sign of continued supportive policies. Bank of America rose 1.1 percent while Citigroup was 1.6 percent higher.
Luxury retailer Tiffany & Company on Tuesday reported adjusted earnings and sales that beat expectations, sending shares up 5 percent. Luxury retailer Tiffany & Company on Tuesday reported adjusted earnings and sales that beat expectations, sending shares up 4.2 percent.
Abercrombie & Fitch late Friday reported a drop in first-quarter same-store sales that was steeper than expected and cut its full-year profit view. Still, its shares rose 1.3 percent. Abercrombie & Fitch late Friday reported a drop in first-quarter same-store sales that was steeper than expected and cut its full-year profit view. Its shares fell 0.6 percent.
The Nikkei steadied on Tuesday, bolstered by Mr. Miyao’s remarks, ending 1.2 percent higher.The Nikkei steadied on Tuesday, bolstered by Mr. Miyao’s remarks, ending 1.2 percent higher.
Central bank officials lifted sentiment in Europe, where the broad FTSE Eurofirst 300 index rose over 1.6 percent, adding to Monday’s 0.3 percent rise. Central bank officials lifted sentiment in Europe, where the broad FTSE Eurofirst 300 index rose over 1.3 percent, adding to Monday’s 0.3 percent rise.
Tuesday’s rebound took Germany’s DAX up 1.3 percent to near recent record highs. In London, the FTSE 100 index was up 1.8 percent, led by banking stocks. Tuesday’s rebound helped Germany’s DAX close 1.4 percent higher. In London, the FTSE 100 index was up 1.6 percent, led by banking stocks.
Assets seen as safe havens fell, leaving the dollar up 0.7 percent against the Swiss franc at 0.9694 francs. “The yen and Swiss franc have dropped noticeably this morning, essentially because risk assets seem to be stabilizing,” said Alvin Tan, a Société Générale currency strategist. Assets seen as safe havens fell, leaving the dollar up 0.7 percent against the Swiss franc at 0.9754 francs. “The yen and Swiss franc have dropped noticeably this morning, essentially because risk assets seem to be stabilizing,” said Alvin Tan, a Société Générale currency strategist.
The euro was down 0.2 percent at $1.2910 against the dollar, trading well within its recent range of $1.28-1.32. The euro was down 0.5 percent at $1.2861 against the dollar, within its recent range of $1.28-1.32.
Investors also deserted German government bonds although the talk of an European Central Bank rate cut lent support. The yield on the 10-year bond was down 1 basis point at 1.43 percent.Investors also deserted German government bonds although the talk of an European Central Bank rate cut lent support. The yield on the 10-year bond was down 1 basis point at 1.43 percent.
Commodity markets remain pressured by an uncertain demand outlook after American and Chinese data last week.Commodity markets remain pressured by an uncertain demand outlook after American and Chinese data last week.
The rising dollar also makes some dollar-based commodities more expensive for nondollar holders. Spot gold was down 1 percent to $1,380.50 an ounce. Spot gold gained 0.1 percent to $1,388 an ounce.
However the better tone on equity markets and signs of rising Middle East tension support oil. United States crude futures gained 0.7 percent to $94.78 a barrel and Brent crude rose 1.4 percent to $104 a barrel. However the better tone on equity markets and signs of rising Middle East tension support oil. United States crude futures gained 1.3 percent to $95.35 a barrel.