Dow’s 128 point gain erases its lackluster Q1 performance taking it to positive territory for the year
Wall Street rallied on Tuesday with US stocks getting a good lift from lower oil prices and strong consumer data. Apparent easing tension between UK and Iran led to crude prices below $65/bbl today, a 2% drop. This, coupled with reassurance about stabilization in the housing market, lifted market sentiments today after the second quarter made a slow start yesterday. Airline stocks were the biggest beneficiaries of the oil price drop. Financial stocks, a group that also struggled in the first quarter, were higher on the day. Technology, which also turned positive for the year, was another source of notable support.
29 out of 30 stocks closed higher today. P&G was the sole loser with a tiny drop of 12 cents. For the day (3 April, Tuesday) the Dow Jones Industrial Average closed higher by 128 points at 12510.3, Nasdaq higher by 28.07 points at 2450.33 and S&P 500 higher by 13.22 points at 1437.77. Altria, Home Depot, Boeing and 3M were the main Dow winners. With today’s gain, Dow is positive for the year.
Stocks extended early gains after the National Association of Realtors said that its pending home sales index, a measure of future U.S. home buying, rose 0.7% in February. However, the index is down 8.5% year on year, and the NAR said that sales may be experiencing "some fallout from a decline in subprime lending." Early sentiment also got a boost from rallies in overseas market.
Good housing erases subprime worries for the moment, chain store sales data boosts Retailers
After the second quarter kicked off slowly yesterday, after a discouraging ISM report, today stocks rallied within an hour after market opened today. The National Association of Realtors said pending home sales rose 0.7% in February to 109.3 following a revised 4.2% drop in January. The report eased the worst of fears that a housing crisis will develop and the same also alleviated concerns that the subprime mortgage meltdown will add to the huge inventory of properties already on the market.
Of the nine other sectors trading higher, Consumer Discretionary was paced the way as its 1.5% advance lifted the sector into positive territory for the year. Retailers got a big boost following a report that showed chain store sales for the week ending 31 March rose 4.9%, the fastest pace in two months. Homebuilders which this year's worst performing S&P industry group was among today's biggest winners following the upbeat housing report.
Home Depot was the leading blue-chip with a 2.4% gain among Dow components as signs of stability in housing lured bargain hunters to the beaten-down retailer. Among technology shares, Google rose 3% after news the Internet search giant will sell television ads through a partnership with EchoStar Satellite and Astound Cable, a small Internet provider in Northern California. eBay jumped 2.4% after Bear Stearns raised its earnings estimate for the online auctioneer.
Crude-oil futures for light sweet crude for May delivery closed at $64.64/barrel (lower by $ 1.3/barrel or 1.97%) on the New York Mercantile Exchange. Crude prices fell today as tensions between Iran and UK eased partially. Today’s closing prices were lowest in almost a week.
Trading volumes showed 1.6 billion shares exchanging hands on the New York Stock Exchange and 1.9 billion on the Nasdaq stock market. Advancing issues outpaced decliners by 3 to 1 on the NYSE and by 19 to 9 on the Nasdaq.
February Factory Orders and March ISM Services data are expected tomorrow. On the earnings front, Best Buy and Circuit City feature among the main companies that will come out with earnings report.