For the first time this week, the major stock market indices went home green.
In reaction to a pair of positive economic reports on the housing sector, the
Dow Jones Industrial Average rose 170.8 points, or 1.6%, to 10625, closing at its highest level for the day. The
Nasdaq Composite Index followed on the heels of the blue-chip rally, ending up 43.2 points, or 2.1%, to 2060.
Traders got the buying bug late in the session, as the early "wait-and-see" approach to the market today turned into a rally that lasted through the close of regular trading.
"At first, people were worried about the spillover from yesterday's selloff, which kept them on the sidelines at the open," said John Peluso, head of listed trading at
. "But once the session got going, buyers got into the market." This morning's economic reports, Peluso said, put investors in a place where they think the economy has seen the worst of the slowdown.
New-home sales, as tracked by the
, jumped 4.2%, to a rate of 1.02 million units in March -- an all-time record. Economists had forecast the number of new single-family homes sold last month to come in at 910,000.
In a separate report,
existing-home sales, as measured by the
National Association of Realtors
, climbed to 5.4 million, the second highest ever. While the housing sector has held up well during the recent economic downturn, these reports were particularly strong and gave a boost to market sentiment today.
Traders were encouraged by today's action. "Buyers are picking their spots," said Ray Hawkins, vice president of block trading at
. "They're not chasing after stocks wildly." After the rip-roaring rally that followed the
Federal Reserve's surprise rate cut last week, the market retreated this week. Many market experts thought the pullback was healthy, and they are further encouraged by the moderation in today's gains.
Leading the Dow higher, shares of
rose 7.8% to $30.81, after the media and entertainment mammoth beat fiscal second-quarter earnings expectations, though it reported a loss, mostly because of $1 billion in noncash restructuring charges. The company reported a loss of 26 cents per share, vs. a profit of 8 cents per share in the year-ago period.
Today's gains in the tech sector came despite an analyst downgrade on the networking sector.
cut its ratings on networkers
, saying it's concerned about capital spending in the telecom sector.
"We believe the group is stuck in a trading range for the next two quarters and perhaps longer," wrote
Warburg analyst Nikos Theodosopoulos in a research note. On the news, the
American Stock Exchange Networking Index
Because Theodosopoulos was not telling investors anything about networkers they didn't already know, today's report had little effect on tech stocks. By now, the capital-spending problem is familiar. Hit by a slowdown in the economy, telecommunications companies, engaged in a massive buildout a year ago, have cut back their purchases. That's hit the once-highflying networking sector hard, and its prices have tumbled.
Looking at the sectors driving today's action, oil, retail and semiconductor stocks rose, while airline, transport and, of course, networking stocks fell. Drug stocks got a boost today, thanks to some solid earnings reports from pharmaceutical companies. And
climbed 5.7% to $50.70, on the announcement that it was raising cigarette prices.
In other economic news, this morning's report on
durable goods orders showed that orders of big-ticket items rose 3% in March, well above the expected 0.6% gain. The jump in orders, however, was mostly due to strength in demand for transportation-related items.
Excluding transportation, orders fell 1.8%. Economists were expecting a drop of only 0.5%. The durable goods orders report measures shipments and orders for manufactured goods like motor vehicles and appliances, those items intended to last more than three years. The manufacturing sector has been hardest hit by the ongoing slowdown in the U.S. economy, so investors watch it carefully for indications of a turnaround.
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Telcos dragged on European stocks today following a blow to
. Merrill cut its 12-month price target on the company to 300 pence from 400 pence.
fell 12.8 to 5827 and the Paris
lost 17 to 5407. Frankfurt's
ended off 9 to 6116.
The euro was lately trading at $0.8965.
Asian markets were mixed overnight. Japanese investors continued to buy stocks on optimism over the reformist candidate's victory in the race for prime minister. Japanese investors are hoping he will be able to lead the economy to health. Tokyo's
rose 84.3 to 13,827.5. Stocks in Hong Kong remained weak, though selling had slowed, and the key
fell 25.1 to 13,249.6.
The dollar was trading at 122.3 yen.
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