News
Dow tops 9,000 as home sales rise for 3rd month
By: examiner.comPosted On: 07/23/2009 12:25 P
The Dow Jones industrials are back above 9,000 for the first time since the beginning of January. A report Thursday of a jump in home sales eased investors' worries about one of the economy's biggest trouble spots. They responded by buying stocks across the market, lifting the major indexes more than 1.5 percent and sending the Dow up more than 100 points past 9,000.
A real estate group said sales of previously occupied homes rose 3.6 percent from May to June. It was the third straight monthly increase and fed investors' hopes that the overall economy is strengthening.
A weak housing market and rising unemployment are widely seen as two of the biggest obstacles to a recovery in the economy. The National Association of Realtors said sales came in at 4.89 million last month, above the 4.84 million analysts had been expecting.
Several better-than-expected earnings reports also helped boost investor sentiment. Ford Motor Co. surprised the market with a second-quarter profit of $2.3 billion due mainly to a huge gain for debt reduction, while drug maker Wyeth, cigarette maker Philip Morris International Inc. and candy maker Hershey Co. all raised their profit forecasts for the year.
Investors were able to look past a government report showing a bigger-than-expected rise in new jobless claims. The Labor Department said the number of new claims for unemployment benefits rose by 30,000 last week to 554,000, slightly above analysts' estimates. However, a Labor Department analyst said the report was distorted by the timing of auto plant shutdowns.
Also, total unemployment benefit rolls fell to the lowest level since mid-April.
After a month of wayward trading, stocks restarted the market's spring rally early last week after companies like Goldman Sachs Group Inc. and Intel Corp. got earnings season off to a good start with solid reports.
"Things are getting much better and the market is pricing it in," said Phil Orlando, chief equity market strategist at Federated Investors.
In late morning trading, the Dow rose 153.11, or 1.7 percent, to 9,034.37. The blue chips last traded and closed above 9,000 on Jan. 6.
The Standard & Poor's 500 index rose 17.72, or 1.9 percent, to 971.79, while the Nasdaq composite index rose 34.19, or 1.8 percent, to 1,960.57.
A wave of merger-and-acquisition activity also supported the market. Bristol-Myers Squibb Co. said it plans to acquire Medarex Inc. for about $2.1 billion, the latest in a string of acquisitions by the drug maker. Medarex surged $7.46, or 89 percent, to $15.86, while Bristol-Myers rose 41 cents, or 2 percent, to $20.70.
Meanwhile, Amazon.com Inc. agreed to buy Zappos.com Inc., a privately held online shoe store, in a deal worth about $850 million. Amazon rose $4.56, or 5.1 percent, to $96.35.
Ford's profit was a huge improvement over the record $8.7 billion loss the company reported the same quarter a year earlier. Without one-time gains, the car maker would have lost $424 million, or 21 cents per share. That is still smaller than the loss of 50 cents per share analysts had been expecting. Ford rose 61 cents, or 9.6 percent, to $6.99.
Wyeth posted a better-than-expected 13 percent jump in second-quarter profit, as cost cuts overshadowed lower sales. It rose 24 cents to $47.10.
Philip Morris said earnings fell 9 percent as the stronger dollar shrunk profit earned in other currencies. The stock jumped $2.66, or 6.1 percent, to $46.54.
And Hershey said its quarterly profit leapt 72 percent thanks to a price hike and a new advertising effort. The shares rose $1.75, or 4.5 percent, to $40.70.
AT&T Inc. and 3M Co. reported drops in earnings, but their results exceeded analysts' expectations. AT&T rose 74 cents, or 3 percent, to $25.58, and 3M rose $3.59, or 5.6 percent, to $68.26.
Bond prices fell, pushing their yields higher, as money flowed back into the stock market and out of safe-haven investments. The yield on the benchmark 10-year Treasury note, which is closely tied to home mortgage rates, rose to 3.63 percent from 3.55 percent late Wednesday.
The dollar was mixed against other major currencies, while gold prices rose.
Oil prices rose 63 cents to $66.03 a barrel on the New York Mercantile Exchange.
Overseas, Japan's Nikkei stock average closed up 0.7 percent. Britain's FTSE 100 rose 1.2 percent in afternoon trading, while Germany's DAX index jumped 2.2 percent and France's CAC-40 rose 1.5 percent.
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