Updated from 4:18 p.m. EDT
Stocks closed near their best levels of the session Tuesday afternoon as a good report on the housing sector helped the market follow through on the previous session's gains.
Dow Jones Industrial Average
was up 61.96 points, or 0.51%, to 12,288.10, and the
rose 8.88 points, or 0.63%, to 1410.94. The
added 13.80 points, or 0.58%, at 2408.21.
Roughly 2.82 billion shares changed hands on the
New York Stock Exchange
, and volume on the Nasdaq reached 1.76 billion shares. Winners outpaced losers roughly 2 to 1.
While the major indices finished higher, each is still in negative territory for 2007. The Dow is now down 1.4% for the year. Meanwhile, the S&P 500 has fallen 0.5%, and the Nasdaq has given back 0.3%.
Before trading got under way, the government said U.S. housing starts jumped 9% in February to 1.525 million annualized units, retracing some of January's 14% drop. Building permits eased 2.5% last month.
On average, economists expected February starts to rise to 1.45 million, and for permits to dip to a 1.55 million annual pace from 1.57 the previous month.
"The rates of decline in both headline starts and permits have slowed sharply in recent months," said Ian Shepherdson, chief economist with High Frequency Economics. "We are more interested in permits as they are much less weather-affected than starts. Excess inventory is still a huge problem."
Following the data, Treasuries were rising. The 10-year note was up 4/32, yielding 4.55%, and the 30-year bond was higher by 4/32 in price to yield 4.71%.
The Philadelphia Housing Sector Index rebounded from its lows and ended up 0.4%. Also on the winning side, the Amex Airline Index rose 1.6%, the Philadelphia Semiconductor Sector Index climbed 1%, and the NYSE Financial Sector Index gained 0.9%.
began the first day of a two-day meeting in Washington. No change in the target fed funds rate, at 5.25% since last June, is expected. However, the central bank's comments on the economy, which will be out around 2:15 p.m. EDT Wednesday, will be carefully examined for clues about potential future moves.
"There's a lot of optimism that the Fed will address the slowdown in housing and possibly the economy," said Robert Pavlik, chief investment officer with Oaktree Asset Management. "This is a sentiment builder. We now think we reached a near-term bottom that stocks have bounced off of. Traders are feeling better and are looking for bargains."
Traders didn't seem nervous about the impending Fed meeting on Monday, as a spate of merger and buyout activity had the bulls in charge. The Dow surged 115.76 points, or 0.96%, to 12,226.17, and the S&P 500 rose 15.11 points, or 1.09%, at 1402.06.
The technology-heavy Nasdaq was better by 21.75 points, or 0.92%, at 2394.41.
As the new session was set to begin, subprime mortgage company
Accredited Home Lenders
said it received a $200 million term loan from Farallon Capital Management, in exchange for 3.3 million warrants to buy shares at $10 each. Accredited Home Lenders soared 20.3% to end at $10.77.
was also higher after Web site
said a deal to acquire the hand-held device maker may be announced soon. Shares of Palm climbed 3.5% to $18.77.
During the session,
cut its first-quarter earnings forecast. The defense company now expects 49 cents to 54 cents a share, compared to the Thomson First Call consensus of 59 cents a share. The stock fell $1.90, or 5.9%, to finish at $30.50.
Among the early research calls, Morgan Stanley upgraded
to overweight from equal-weight, and AG Edwards initiated coverage of
with a buy rating and a $58 price target.
Juniper added 78 cents, or 4.3%, to $18.75. Dow component Citigroup tacked on 58 cents, or 1.2%, at $50.64.
with an outperform rating. The stock was higher by 13 cents, or 0.4%, to close at $31.35.
Commodities prices were higher. The front-month April crude contract, which is trading for the last session, finished up 14 cents to $56.73 a barrel. Natural gas tacked on 6 cents at $6.91 per million British thermal units.
Precious metals were on the rise. Gold ended up $4.70 at $659 an ounce, and silver was higher by 14 cents at $13.37 an ounce.
Overseas, stocks in Asia and Europe were stronger. Tokyo's Nikkei 225 was up 0.9% at 17,163, and Hong Kong's Hang Seng added 0.5% to 19,357. London's FTSE reversed losses and was up 0.5% to 6220. Frankfurt's Xetra DAX also turned positive and gained 0.4% to 6700.