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Stocks make U-turn, rising on home prices, Europe
NEW YORK (AP) — The stock market bounced back Tuesday following a surge in U.S. home prices and signs of strength in Europe’s economy. Strong earnings reports also helped power the gains.
The Dow Jones industrial average was up 123 points to 14,003 as of 2:13 p.m. EST, erasing most of its loss from Monday. The Standard & Poor’s 500 gained 17 points to 1,513. The Nasdaq composite was up 41 points to 3,171.
The rise follows two days of whiplash. On Monday, the Dow dropped 129 points, its worst sell-off of the year so far. That came after the Dow gained 149 points Friday, closing above 14,000 for the first time since 2007.
Tuesday’s advance was driven by new data showing that U.S. home prices rose in December at the fastest pace in more than six years. CoreLogic, a real estate data provider, reported that home prices rose 8.3 percent. In Europe, a measure of manufacturing and service businesses rose to a 10-month high in January.
Estee Lauder rose $3.61 to $64.66 after reporting earnings that beat analysts’ expectations. Profits surged 13 percent at the beauty products company as sales in the U.S. and emerging markets rose.
Computer Sciences Corp., an information technology services company, was the biggest gainer in the S&P 500. CSC rose $4.38 to $46.30 after the company said it was raising its earnings outlook for the year because its cost-cutting efforts were yielding better results than it had expected.
Stocks have gotten off to a strong start this year. The Dow advanced 5.8 percent in January, its best start to the year since 1994, according to data compiled to S&P Dow Jones indices. The S&P 500 rose 5 percent in the month.
Lance Roberts, chief economist at Streettalk Advisors in Houston, said that’s related more to the Federal Reserve’s commitment to keep money cheap than to companies’ performance. If earnings are beating estimates, he said, it’s largely due to expectations being so low.
“If you lower the hurdles enough, companies can get over them,” Mr. Roberts said.
The fact that individual investors are starting to return to stocks, as they have in recent weeks, is another sign that the market is due for a correction, Mr. Roberts and other analysts have said.
McGraw-Hill Cos., parent of the Standard & Poor’s ratings agency, fell $3.82 to $46.50 after the federal government sued S&P. The government said that S&P knowingly misled investors about the quality of the mortgage-backed securities it was rating in the runup to the financial crisis that caused the Great Recession. The stock dropped 14 percent on Monday after early reports about the lawsuit leaked out.
The yield on the 10-year Treasury note, which moves inversely to its price, climbed six basis points to 2.02 percent.
Other stocks making big moves;
• Cereal maker Kellogg gained 70 cents to $58.80 after reporting fourth-quarter results. It reported a fourth-quarter loss on a pension-related charge, but its underlying earnings rose, helped partly by its recent purchase of Pringles chips.
• Dell, the struggling computer giant, rose 19 cents to $13.47 after the company announced a $24.4 billion buyout deal led by founder Michael Dell that will take the company private at $13.65 a share.
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