- The Washington Times - Monday, May 4, 2009

UPDATED:

Wall Street closed Monday with gains following upbeat reports on home contracts and construction spending.

The Dow Jones Industrial Average closed at 8,426.74, up 214.33 points. The broader Standard & Poor’s 500-stocks Index closed at 907.24, up 29.72 points, and the tech-heavy NASDAQ closed at 1,763.56, up 44.36 points.

U.S. markets have posted significant gains since hitting 11-year lows in early March, with the S&P index up nearly 30 percent. The rally has largely followed first-quarter reports by major U.S. banks that were better than expected.

Despite signs that the worst of the recession might be over, U.S. markets still remain significantly down since their October 2007 highs.

The National Association of Realtors said Monday pending home sales increased in March, with help from first-time buyers taking advantage of low costs and a federal tax benefit.

The number of signed contracts last month increased 3.2 percent from February and 1.1 percent from March 2008, according to the group’s Pending Home Sales Index, which is based on family income, home prices and mortgage rates. The number of contracts has increased for two consecutive months and exceeded analysts’ expectations.

The Commerce Department reported construction spending increased 0.3 percent in March, compared to the $967.1 billion spent in the previous month. The increase followed five straight decreases and also exceeded analysts’ expectations.

However, the $969.7 billion spent in March was 11.1 percent below the $1,090.5 billion spent in March 2008.

“It’s was all housing and construction today, with a little bit of manufacturing thrown in,” said Brian Lipps, a Charles Schwab & Co. vice president.

Mr. Lipps said China reported an increase in manufacturing for the first time in nine months.

Analysts and investors also are watching Italian automaker Fiat’s plans to buy some of General Motors Corp.’s European operations. General Motors is making efforts to avoid bankruptcy, and Fiat is entering a merger with Chrysler LLC, which filed last week for bankruptcy protection.

They also are awaiting the federal government’s release Friday on April unemployment and the finding of its so-called “stress tests” on the country’s 19 largest financial institutions. The findings were scheduled to be released Monday but have been postponed until Thursday.

Sprint Nextel Corp. reported a first-quarter loss Monday. The company said its net-operating revenue of $8.2 billion for the quarter was 12 percent lower than in the first quarter of 2008 and 3 percent lower than the fourth quarter of 2008. Sprint attributed the losses in part to a decline in revenue from its wireless communication operations. The stock was up 7.07 percent, to $5 a share, at the close of trading.

“The markets tend to focus on good news and shrug off the bad news,” Mr. Lipps said.

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