CLICK HERE for a report on local home sales during February.
NEW YORK - Wall Street got the news it wanted on one of the economy's biggest problems - housing - and celebrated by hurtling the Dow Jones industrials up nearly 500 points.
Investors added rocket fuel Monday to a two-week-old advance, welcoming a report showing a surprising increase in home sales. Major stock indicators surged more than 6 percent, including the Dow, which had its biggest percentage gain since October.
Although analysts were still hesitant to say Wall Street is squarely on its way to recovery after the collapse that began last fall, they said the news bolstered the belief that the economy is starting to heal.
"It's just hard to argue that there isn't an improvement in economic activity on the horizon," said Jim Dunigan, executive vice president at PNC Wealth Management.
The National Association of Realtors' existing home sales report was overwhelmingly positive for the market although it showed a decline in home prices in February. The Dow rose 497.48, or 6.8 percent, to 7,775.86, its highest finish since Feb. 13. It was the biggest point gain for the blue chips since Nov. 13 when they rose 552 points and the biggest percentage gain since Oct. 28. when they rose 10.9 percent.
Broader stock indicators also surged. The Standard & Poor's 500 index rose 54.38, or 7.1 percent, to 822.92, crossing the psychological milepost of 800. The Nasdaq composite index rose 98.50, or 6.8 percent, to 1,555.77.
The Russell 2000 index of smaller companies rose 33.61, or 8.4 percent, to 433.72.
More than 10 stocks rose for every one that fell on the New York Stock Exchange, where volume came to 1.9 billion shares.
The Dow is now up 1,228 points, or 18.8 percent, from March 9, when it finished at its lowest point in nearly 12 years.
Homebuilders extended an early rise after the home sales report. KBR Inc. rose 79 cents, or 5.7 percent, to $14.62, while Toll Brothers Inc. rose $1.84, or 10.8 percent, to $18.84. Hovnanian Enterprises Inc. jumped 30 cents, or 25 percent, to $1.48.
Overseas, Britain's FTSE 100 rose 2.9 percent. Germany's DAX index rose 2.7 percent, and France's CAC-40 rose 2.8 percent. Japan's Nikkei stock average rose 3.4 percent.
Sales of previously occupied homes jumped unexpectedly in February by the largest amount in nearly six years as first-time buyers took advantage of deep discounts on foreclosures and other distressed properties.
Economists said sales, while still at levels not seen since 1997, may finally be coming back to life after declining sharply following the stock market plunge last autumn.
The National Association of Realtors said Monday that sales of existing homes grew 5.1 percent to an annual rate of 4.72 million last month, from 4.49 million units in January.
It was the largest monthly sales jump since July 2003, with first-time buyers accounting for about half of all transactions. Sales had been expected to dip to an annual pace of 4.45 million units, according to Thomson Reuters. The results, which came after a steep decline in January, mean that sales activity has returned to December's levels, but still remains lower than most of last year.
"If January was a disaster for housing, February may be the rebound month," wrote Joel Naroff, president of Naroff Economic Advisors.
The sales figures don't yet reflect the new $8,000 tax credit designed to lure even more first-time buyers into the market. That should juice up early summer sales, but how much will depend on the overall condition of the U.S. economy.
"If the economy stabilizes around midyear and financial conditions improve, then sales will probably begin to slowly increase as buyers step back into the market," wrote JPMorgan Chase analyst Abiel Reinhart. "An important reason for this is that affordability has already increased sharply, both as a result of lower prices and lower mortgage rates."comments powered by Disqus