NEW YORK (AP) — Lower-than-expected housing figures coaxed buyers back to Wall Street yesterday, giving stocks a subdued rally as investors grew hopeful that the economy might be cooling. Technology stocks had the largest advance, but low volume pointed to a general lack of conviction in the market.
The Commerce Department’s housing report gave investors some much-needed hope that the Federal Reserve, concerned about an overheating economy, might not raise interest rates as high or as fast as the market has feared.
However, in the aftermath of Monday’s slaying of the Iraqi Governing Council president, many would-be buyers sat out the session despite prices made attractive by weeks of selling.
The Dow Jones Industrial Average was up 61.60, or 0.6 percent, at 9,968.51.
Broader stock indicators were moderately higher. The Standard & Poor’s 500 Index gained 7.39, or 0.7 percent, to 1,091.49, and the Nasdaq Composite Index was up 21.18, or 1.1 percent, at 1,897.82.
The Commerce Department said homes were being built at an annual rate of 1.97 million, representing a 2.1 percent decline from a strong March reading. With mortgage rates expected to rise, economists expect the housing market to come off its recent flurry of activity, but the industry was expected remain healthy.
However, with volume on the New York Stock Exchange very light and prices slipping slightly from their session highs, analysts expected more losses and few gains, in the short term.
And although many investors are looking to the Federal Reserve meeting in June for a reading on inflation and interest rates, it could be a while before Wall Street gets a good reading on how well any rate increases are managing inflation.
“The market is still going to have some trouble figuring out if we’re going to have a big or small inflation spike, and is the Fed going to be ahead or behind it?” said Scott Wren, equity strategist for A.G. Edwards & Sons. “Those questions are going to take a couple of months to work out, and until then, we’ll be stuck in this range.”
The nation’s retailers continued to show strong earnings for the first quarter. Dow component Home Depot Inc. jumped $1.15 to $34.62 after posting a 21 percent hike in quarterly profits, surging past Wall Street expectations by 9 cents per share before one-time charges.
Staples Inc. beat estimates by 3 cents per share on surging sales, posting its 10th straight quarter in which it increased profits by 20 percent or more. The office supply retailer surged $1.97 to $26.39.
Book retailer Barnes & Noble Inc. was up 43 cents at $29.08 after exceeding earnings expectations by 5 cents per share on strong same-store sales for the first quarter.
Department store chain J.C. Penney Co. Inc. beat estimates by 4 cents per share, doubling its operating profit from a year ago, although the company was forced to take a $77 million charge because of the sale of its Eckerd drugstore chain. Penney rose $2.11 to $33.71.
High-end retailer Saks Inc. rose 12 cents to $14.10 after meeting expectations on record net income.