Wall Street rallied Tuesday, largely in reaction to favorable reports from the downtrodden housing front showing that the index of pending resales of homes rose 6.3 percent in December, the first increase since August.
The markets ignored abysmal January sales numbers from the auto industry, with the Dow soaring through the 8,000 mark and the tech-heavy Nasdaq passing the 1,500 point.
At the close, the Dow Jones Industrial Average jumped 141.53, or 1.78 percent, to 8078.36. The Nasdaq rose 21.87, or 1.46 percent, to 1516.30. The broader Standard & Poor’s 500 climbed 13.07, or 1.58 percent, to 838.51.
On housing, the rare good news report from the National Association of Realtors came as a surprise and indicated that the falling prices of homes, including those on the market that have been foreclosed, spurred an increase in demand. The housing bust was a chief cause of the economic collapse in September.
The index of pending home resales — those for which contracts were signed in December — rose 6.3 percent to 87.7 from a revised 82.5 in November, the association said.
The pending resales increased 13 percent each in the South and Midwest but dropped 3.7 percent in the West and 1.7 percent in the Northeast, the report said.
On the auto front, U.S. sales for nearly the entire industry plunged as expected last month, continuing a slide in which the decline has surpassed 30 percent for the fourth consecutive month.
Sales for General Motors plummeted 49 percent, Ford dived 40 percent, Toyota dropped 32 percent, Nissan fell 30 percent and Honda slid 28 percent. Only Subaru, up 8 percent, and Hyundai, up 14 percent, registered increases.
The avalanche could mean that the seasonally adjusted annual sales rate for January could fall below 10 million. The previous month in which that happened was August 1982, in a recession year, when it hit 9.9 million, the Associated Press quoted Ward’s AutoInfoBank.
Industrial, technology and drug makers’ stocks led the market rally that CNBC said also was influenced by three events: the dropping price of the dollar, the Republican stimulus plan with its corporate tax credits and consumer tax cuts, and Treasury Secretary Timothy F. Geithner’s advocating a “very aggressive” fiscal policy.
Financials sank on concerns that the second phase of the $700 billion bailout would be diluted, CNBC said.
The price of a barrel of light, sweet crude oil hovered around $41.
Two of the nation’s biggest drug makers, Merck & Co. and Schering Plough, showed profits for the final quarter of last year, as did Archer Daniels Midland Co., the food processor and ethanol producer. All beat analysts’ estimates.
But Dow Chemical Co. reported a loss of more than $1.5 billion, and cell phone producer Motorola lost $3.6 billion during the same three-month period. Analysts had predicted a profit for Dow and thought Motorola would break even.
In the troubled banking sector, PNC Financial Services Group Inc. of Pittsburgh also reported a loss because of charges accompanying its purchase of National City Corp., failing to meet analysts’ expectations. The bank has said it will cut 5,800 jobs after it buys National City.
Home builder H.R. Horton Inc. also reported a loss for the fourth quarter, but it was less than analysts thought it would be because the company cut costs.