Stocks Catch Bounce on Home Price Data
NEW YORK ( TheStreet) -- U.S. stocks finished with mild gains on Tuesday as investors let improved home price data deflect their attention away from the eurozone debt crisis.
The Dow Jones Industrial Average rose 32 points, or 0.26%, to close at 12,535. The blue-chip index ranged from 12,576 to 12,452 on the day.
Within the Dow, 18 of the index's 30 components were on the rise, led by JPMorgan Chase (JPM - Get Report), Walt Disney (DIS), McDonald's (MCD), Exxon Mobil (XOM), Chevron (CVX) and General Electric (GE)Weak spots among the blue chips included Hewlett-Packard (HPQ), du Pont (DD) and IBM (IBM). Shares of JPMorgan got a 1.2% lift after Goldman Sachs added the bank to its America's conviction buy list, while removing and downgrading Morgan Stanley (MS), whose stock was up incrementally. Consumer non-cyclicals, energy, financials and services were the strongest sectors in the broad market. The Case-Shiller 20-city home-price index showed that home prices fell by 1.9% in April from a year ago. While still negative, this is an improvement over the 2.6% decline the month before. Economists, on average, thought the index would fall 2.5% from a year ago. Home prices on average increased 1.3% in April, month over month, for the 20-city composite after seven straight months of declines. This supports the view of Michelle Meyer, senior U.S. economist at Bank of America Merrill Lynch, that national home prices bottomed at the beginning of the year. "However, we do not expect a sustained upturn in prices from here," she said. "Rather, we expect prices to weaken again at the end of the year, as the economy slows and distressed inventory picks up." "On the whole, this report provides confirmation that the housing sector is finally stabilized and may be on the verge of a rebound, as the supply/demand imbalance continue to move in a more favorable direction," said Millan Mulraine, an economist at TD Securities. While he expects any rebound to remain modest, particularly given the weakening economic growth and labor market momentum in recent months, he also believes that "the foundation has been laid" for a sustained recovery in the coming months. Meanwhile, the Conference Board said that its U.S. consumer confidence index fell further in June to 62 from a downwardly-revised 64.4 in May. Economists surveyed by Thomson Reuters expected a reading of 63.8 for June. The Conference Board said that income expectations among consumers, which had improved last month, declined in June, and that if this trend continues, spending could be restrained in the short-term. Stocks were hammered Monday as investors fled riskier assets on concerns about Europe's ability to address its escalating debt problems. Europe's leaders are slated to meet on Thursday and Friday at a summit in Brussels to discuss plans to address the region's debt problems and flagging economy. Ahead of the meeting, Reuters reported that German Chancellor Angela Merkel said that Europe won't share liability for "as long as I live," casting further doubts about the ability of leaders to achieve anything substantial at the summit. On Tuesday, both Spain and Italy saw their borrowing costs soar at short-term debt auctions as Moody's cut its debt ratings on 28 Spanish banks on growing doubts about the country's ability to support its banks.
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