Tue, May 18, 2010
Business > Markets

US stocks climb in early trading as euro rises

2010-05-18 14:02:07 GMT2010-05-18 22:02:07 (Beijing Time)  SINA.com

NEW YORK – A jump in home construction, tame inflation and upbeat earnings are giving stocks a boost in early trading.

Major indexes are also getting a lift Tuesday because of gains in the euro, which has been the primary driver of trading in recent days. The euro rose to $1.2427 a day after hitting a four-year low. The euro is now seen as a proxy for confidence in Europe's economy.

The modest rebound in the euro comes as European finance ministers and European Union leaders meet to hammer out further details on a nearly $1 trillion rescue package agreed to last week. The bailout will provide countries like Greece that are facing mounting debt with access to cheap loans so they can avoid defaulting. The meetings could provide reassurance to investors that the 16 European countries using the euro have contained their debt problems.

The euro had been in a free fall in recent days because of concerns that severe cost-cutting measures in countries like Greece, Spain and Portugal will drag down Europe's economy and slow a global recovery.

While so much attention has been focused on Europe, investors had largely ignored signs of U.S. economic growth. Earlier this year, stocks routinely rose following upbeat domestic economic reports.

However, some relatively positive reports are helping stocks Tuesday. The Commerce Department said new home construction jumped 5.8 percent in April, to a more-than-expected seasonally adjusted annual rate of 672,000 units. It was the best reading since late in 2008.

The Labor Department said inflation remains benign. The Producer Price Index, which measures the price of goods before they reach consumers, fell 0.1 percent in April. Economists polled by Thomson Reuters had forecast a jump of 0.1 percent.

Retail giants Wal-Mart Stores Inc. and Home Depot Inc. both reported better-than-expected quarterly earnings. Shares of the companies, which are both components of the Dow Jones industrial average, climbed in early morning trading.

The Dow rose 70.96, or 0.7 percent, to 10,696.79. The Standard & Poor's 500 index rose 9.73, or 0.9 percent, to 1,146.67, while the Nasdaq composite index rose 18.17, or 0.8 percent, to 2,372.40.


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