NEW YORK (AP) — Strong earnings from Home Depot helped lift the Dow Jones industrial average Tuesday. A jump in home sales and consumer confidence also brought buyers back to the market after a big sell-off Monday.
The Dow was up 99 points, or 0.7 percent, to 13,883 as of 2:48 p.m. The Dow fell 216 points the day before, its biggest drop in three months, on concern that the European debt crisis may flare up again.
The Standard & Poor’s 500 index rose eight points, or 0.6 percent, to 1,496. The Nasdaq composite was up 12 points, or 0.4 percent, at 3,130.
Home Depot, the biggest home improvement store chain in the country, jumped $3.44, or 5.4 percent, to $67.30 after reporting that its income rose 32 percent in the latest quarter thanks to strong U.S. sales and the cleanup that followed Superstorm Sandy.
Macy's results also beat analysts’ forecasts, and its stock rose $1.33, or 3.5 percent, to $39.85.
Strong earnings from home improvement companies such as Home Depot and Lowe's, which reported earnings Monday that beat Wall Street forecasts, compounded evidence that the U.S. housing market is maintaining its recovery, Mr. Mussio said. Also Tuesday, the government reported that sales of new homes jumped 16 percent last month to the highest level since July 2008.
The rebounding housing sector has been an important factor behind a rally that pushed the Dow above 14,000 last week, close to its record-high close of 14,164, reached in October 2007. The Dow is still up 6 percent this year, even after Monday’s sell-off. The S&P 500 is up 5 percent.
Also Tuesday, a measure of consumer confidence rose sharply, reversing three months of declines, as shoppers began adjusting to a payroll tax hike last month.
Investors closely watched testimony by Federal Reserve Chairman Ben S. Bernanke. The Fed chairman said that the automatic government spending cuts due to take effect Friday would put a drag on the economy. He urged lawmakers and the White House to replace the cuts with longer-term policies to reduce the budget deficit.
Investors shouldn’t be dissuaded from buying stocks by any flare-up in Europe’s economic troubles, said Hans Olsen, a strategist at Barclays. The strategist said stocks should have a good year thanks to earnings growth and a pickup in corporate dealmaking.
Deals have accelerated sharply in the past three months and have involved household names including Heinz, Dell and American Airlines. Some of the acquired companies soared 20 percent or more when the deals were announced.
While U.S. market rose, European markets fell again as investors worried about Italy’s political situation. The country is facing political gridlock after elections left parliament with no clear-cut winner.
U.S. stocks slumped Monday after election results in Italy showed a race too close to call. That situation left investors fearful that the country, the euro region’s third-largest, will struggle to form a government that can move forward with reforms to revive the economy, rekindling the region’s debt crisis and worries over the viability of its shared currency, the euro.View Entire Story
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