Home Depot helps Dow reclaim much of Monday's loss


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Posted Online: Feb. 26, 2013, 9:03 pm
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The Associated Press
NEW YORK (AP) — A jump in home sales and strong earnings from Home Depot helped the Dow claw back more than half of its losses from Monday. Improving consumer confidence also brought back buyers to the market.

The Dow Jones industrial average closed up 115.96 points, or 0.8 percent, to 13,900.13. The Dow fell 216 points the day before, its biggest drop in three months, on concern that the European debt crisis may flare up again. The index has moved 100 points or more on four out of the past five trading days.

The Standard & Poor's 500 index rose 9.09 points, or 0.6 percent, to 1,496.94. The Nasdaq composite was up 13.40 points, or 0.4 percent, at 3,129.65.

Home Depot, the biggest home improvement store chain in the country, jumped $3.64, or 5.7 percent, to $67.56 after reporting that its income rose 32 percent in the latest quarter thanks to strong U.S. sales and the cleanup that followed Superstorm Sandy. That made it the biggest gainer in the Dow, accounting for about 28 points, or about a quarter, of its advance.

"Companies on the whole, particularly U.S. companies, are doing well," Michael Mussio, a portfolio manager at FBB Capital, said.

Strong earnings from home improvement companies, such as Home Depot and Lowe's, which reported earnings Monday that beat Wall Street forecasts, compounded evidence that the U.S. housing market is maintaining its recovery, Mussio said. Also Tuesday, the government reported that sales of new homes jumped 16 percent last month to the highest level since July 2008.

The report boosted housing companies, which led the S&P 500 higher. PulteGroup rose $1.03, or 5.7 percent, to $19.05, edging out Home Depot as the biggest gainer in the index. D.R. Horton advanced 88 cents, or 4.12 percent, to $22.25 and Lennar Corp. rose $1.35, or 3.7 percent, to $38.01.

The rebounding housing sector has been an important factor behind a rally that pushed the Dow above 14,000 last week, close to its record high close of 14,164 reached in October 2007. The Dow is still up 6 percent this year, even after Monday's sell-off. The S&P 500 is up 5 percent.

Also Tuesday, a measure of consumer confidence rose sharply, reversing three months of declines, as shoppers began adjusting to a payroll tax hike last month.

Investors closely watched testimony by Federal Reserve Chairman Ben Bernanke. The Fed chairman said that the automatic government spending cuts due to take effect Friday would put a drag on the economy. He urged lawmakers and the White House to replace the cuts with longer-term policies to reduce the budget deficit.

Investors shouldn't be dissuaded from buying stocks by any flare-up in Europe's economic troubles, says Hans Olsen, a strategist at Barclays. The strategist says stocks should have a good year thanks to earnings growth and a pickup in corporate dealmaking.

Deals have accelerated sharply in the last three months and have involved household names including Heinz, Dell and American Airlines. Some of the acquired companies soared 20 percent or more when the deals are announced.

It's not yet clear how the recent see-saw in the market will affect investors. Individual investors have been creeping back into stocks since the start of this year, but the swings might yet unnerve them.

"The gyrations worry them, it scares them, even though the market is up," says Gabriel Fancher, an adviser at the Financial Group, a financial planner. "The market seems out of people's hands these days."

Tuesday's good news about the economy in the U.S. helped investors turn their focus away from Europe.

While U.S. market rose, European markets fell again as investors worried about Italy's political situation. The country is facing political gridlock after elections left Parliament with no clear-cut winner.

U.S. stocks slumped Monday after election results in Italy showed a race too close to call. That left investors fearful that the country, the euro region's third-largest, will struggle to form a government that can move forward with reforms to revive the economy, rekindling the region's debt crisis and worries over the viability of its shared currency, the euro.

Italy's main stock index dropped 4.9 percent Tuesday. The yield on Italy's benchmark government bond rose sharply, to 4.83 percent from 4.43 percent the day before, as investors sold them. That's still far below the 7 percent the yield traded at in January 2012, when confidence in Italy's finances was far lower. The euro was little changed against the dollar.

Other European indexes also fell, but not as much. Stocks fell 2.3 percent in Germany, 2.7 percent in France, and 1.3 percent in Britain.

In U.S. government bond trading, the yield on the 10-year Treasury note, which moves inversely to prices, rose two basis points to 1.88 percent.

















 



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  Today is Saturday, April 19, the 109th day of 2014. There are 256 days left in the year.

1864 -- 150 years ago: Miss McCorkindale has opened millinery rooms over Gimbel's dry goods store, where she offers a choice lot of millinery goods, which she will manufacture to order.
1889 -- 125 years ago: The little South Park Presbyterian chapel celebrated it first Easter decorated with flowers for an afternoon worship service attended by a large congregation.
1914 -- 100 years ago: The Wennerberg Chorus of Augustana College has returned from a 2,000-mile tour in the Eastern states and Illinois.
1939 -- 75 years ago: Col. Charles Lindbergh has stated that he is convinced that Germany's air force is equal to the combined sky fleets of her potential European foes.
1964 -- 50 years ago: Small gas motors may be permitted on boats in the lake to be built in Loud Thunder Forest Preserve. The prospect was discussed yesterday at a meeting of the Rock Island County Forest Preserve Commission.
1989 -- 25 years ago: The annual Dispatch/Rock Island Argus Spelling Bee continues to be a family tradition. Ed Lee, an eighth-grader at John Deere Junior High School, Moline, is the 1989 spelling bee champion from among 49 top spellers in Rock Island, Henry and Mercer counties. He advances to the competition in Washington, D.C. Runnerup was Ed's sister, Susan.






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