Wed, May 26, 2010
Business > Markets

US stocks add to gains after April home sales jump

2010-05-26 14:50:51 GMT2010-05-26 22:50:51 (Beijing Time)

Stocks rose Wednesday after gains in durable goods orders and home sales helped reassure traders that a rebound is occurring.

The Dow Jones industrial average rose about 100 points in morning trading after recovering from a intraday loss of nearly 300 points Tuesday to end down by 22. The comeback was stoked by comments from congressional leaders saying they wouldn't push for banks to spin off their lucrative trading desks as part of financial regulation reform.

The recovery on Tuesday gave traders a break from persistent worries about European government debt and allowed them to focus on economic news.

The durable goods report gave investors further evidence the U.S. economy is improving. The Commerce Department said orders for big-ticket manufactured goods rose 2.9 percent last month, more than double the 1.3 percent gain forecast by economists polled by Thomson Reuters. It was the biggest jump in orders in three months.

The U.S. manufacturing industry has been consistently strong throughout the recovery. April's figures were boosted by a big rise in transportation orders. Excluding transportation, orders dipped 1 percent.

The Commerce Department also reported that sales of new single-family homes rose 14.8 percent to an annual rate of 504,000 units after buyers raced to secure an expiring tax credit. That followed a 29.8 percent rise in March that was the biggest increase in 47 years. The latest gain is well ahead of estimates.

Investors' late-day focus Tuesday on domestic news was a change from what has driven trading for the past few weeks. Investors had been almost wholly concentrating on whether steep budget cuts to manage rising debt in European countries would slow a global economic recovery in the coming months.

Although signs still point to recovery in the U.S., many concerns about Europe remain. The euro, which is used by 16 European countries, fell again Wednesday. The currency has become a proxy for investor confidence in Europe's ability to contain its debt problems the health of the continent's economy. The euro remains close to the four-year low it hit last week. It was down to $1.2279 Wednesday.

In midmorning trading, the Dow rose 101.04, or 1 percent, to 10,144.94. The broader Standard & Poor's 500 index rose 12.64, or 1.2 percent, to 1,086.67. The Nasdaq composite index rose 36.85, or 1.7 percent, to 6,739.79.


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