THE NEW YORK REPORT
US stocks snapped a three-day losing streak yesterday as stronger-than-expected home sales data fuelled optimism while a weaker dollar boosted commodity-linked stocks.
Sales of previously owned US homes rose to their highest level in more than 2-1/2 years last month. That helped to ease concerns about the sector generated last week when another report showed housing starts fell sharply in October.
Yesterday’s data went some distance to reassure investors who have pared positions as they fret about the economy. Stocks rallied broadly, with all 10 S&P sectors showing strong gains.
The Dow industrials reached a new 13-month high but volume was light, which some investors read as a lack of conviction.
“We had one bad (housing) start number and people were so willing to talk about a double-dip (recession),” said Jim Paulsen, of Wells Capital Management. “The great bulk of the evidence says there’s definitely been a recovery going on in housing, and today certainly adds to that.”
The Dow Jones industrial average gained 132.79 points, or 1.29 per cent, to end at 10,450.95. The Standard & Poor’s 500 Index rose 14.86 points, or 1.36 per ent, to 1,106.24. The Nasdaq Composite Index added 29.97 points, or 1.40 per cent, to close at 2,176.01.
The US dollar fell 0.7 per cent against major currencies after suggestions the Federal Reserve should extend its mortgage-related assets purchase programme. That fuelled expectations that interest rates would remain low for an extended period.