Dow up 179 on upbeat housing news

UPDATED:

NEW YORK (AP) — Investors restarted Wall Street’s rally Tuesday, buying financial and home-builder stocks following a surprisingly upbeat report on home construction.

According to preliminary calculations, the Dow rose 178.73, or 2.5 percent, to 7,395.70.

Broader stock indicators also advanced. The Standard & Poor’s 500 index rose 24.23, or 3.2 percent, to 778.12, while the Nasdaq composite index rose 58.09, or 4.1 percent, to 1,462.11.

The Russell 2000 index of smaller companies rose 17.23, or 4.5 percent, to 403.59.

Four stocks rose for every one that fell on the New York Stock Exchange, where volume came to a light 1.49 billion shares. Light volume indicates less conviction behind the market’s moves.

The government’s report that housing starts rose unexpectedly in February more than offset news that Alcoa Inc. is slashing its dividend.

The upbeat construction report provided the latest glimmer of hope for Wall Street and revived interest in the long-suffering housing industry. Stocks began rallying a week ago after Citigroup Inc. said it had operated at a profit in the first two months of the year.

Similarly upbeat assessments from other troubled banks and better-than-expected readings on retail sales have led some investors to believe the market has been too pessimistic about the economy.

Stocks surged last week in a four-session rally that left market barometers up about 10 percent — the type of gains they might normally take a year to assemble. Buyers stepped in again Tuesday after stocks posted moderate declines on Monday.

Brett D’Arcy, chief investment officer at CBIZ Wealth Management, said relatively quiet trading the past two days is “a great sign” because it means investors are holding on to gains from week and aren’t trying to grab quick profits. He said that indicates a base could be forming in the market. A week ago, the Dow jumped 379 points in one session.

Mr. D’Arcy said technology companies got an extra boost as investors moved back into those stocks after they fell sharply Monday.

The market has established a clear shift in tone over the past week. Jittery traders had blown apart earlier rallies this year by selling just as stocks managed to advance. A 20 percent run-up from late November until the start of the year fizzled as worries grew about the tattered balance sheets at large banks and signs that consumers will pulling back on their spending.

Renewed signs of balance in the economy since then have led investors to become more comfortable owning shares again.

Analysts caution that risks remain, but investors embraced the data on home construction that came in well ahead of what economists had been expecting. Building-permit applications, a key measure of future activity, also rose unexpectedly.

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