Strong home sales cheer US investors
US stocks rose slightly yesterday in a late rally as investors rotated into financial shares, which had lagged in the recent two-week run-up.
Upbeat data on new home sales underpinned financial stocks, the session’s strongest sector, and prompted investors to snap up the shares of several regional banks, which had been among the worst hit by credit losses tied to a weak housing market.
Regions Financial jumped 8.9 per cent to $4.02 on the New York Stock Exchange and Zions Bancorporation soared 13 per cent to $12.65 on the Nasdaq, while the KBW Bank Index rose 3.1 per cent.
Financials had lagged in the previous weeks, but Friday saw the beginning of a rotation into the sector and out of technology, which continued yesterday, according to Michael James, senior trader at Wedbush Morgan.
The Dow Jones US home construction index shot up 4.3 per cent after data showed US new home sales posted their biggest monthly gain in eight years in June, suggesting the housing market may be starting to recover from its worst slump since the Great Depression of the 1930s.
Stronger-than-expected earnings, coupled with upbeat economic data, have lifted indexes recently, giving stocks their best two-week run since just after the S&P 500 hit a 12-year closing low in the beginning of March. The three major indexes rose about 11 per cent each over the past two weeks.
The Dow Jones industrial average rose 15.27 points, or 0.17 per cent, to close at 9,108.51. The Standard & Poor’s 500 Index gained 2.92 points, or 0.30 per cent, to 982.18. The Nasdaq Composite Index added 1.93 points, or 0.10 per cent, to end at 1,967.89.
Shares of Dow component Verizon Communications fell 1.6 per cent to $31 after the company reported second-quarter earnings that fell from a year ago.
Aetna shares shed 2.7 per cent to $25.72 after the company, one of the biggest US providers of employer-based health insurance, cut its full-year outlook. After the bell Amgen rose 3.2 per cent to $62.72 as the firm raised its full-year earnings.