Gain in Home Prices Lifts Stocks: Dow at New Record, S&P Near High

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NEW YORK, NY - MARCH 25:  Traders work  the floor of the New York Stock Exchange during late trading on March 25, 2013 in New York City. The Dow Jones Industrial Average closed down 64 points amid renewed worries about Cyprus.  (Photo by John Moore/Getty Images)
John Moore/Getty Images
By MATTHEW CRAFT

NEW YORK (AP) - The Standard & Poor's 500 index closed within a short reach of its all-time high on Tuesday. Rising home prices and orders for manufactured goods drove stocks up from the opening bell.

The S&P 500 index rose 12.08 points, or 0.8 percent, to close at 1,563.77. That's less than two points from the peak it reached on Oct. 9, 2007, before a recession and ensuing financial crisis battered markets.

The Dow Jones industrial average rose 111.90 points, also 0.8 percent, to 14,559.65. That broke the previous closing record, set on March 14, of 14539.29.

"Unless something major comes along to derail this rally, it just seems like the market is going to keep climbing higher," said Marty LeClerc, the managing partner of Barrack Yard Advisors, an investment firm in Bryn Mawr, Pa.

Factory orders surged in February, helped by stronger demand for commercial aircraft. Overall orders for durable goods, a catchall term for products ranging from refrigerators to jumbo jets, jumped 5.7 percent from the previous month, the Commerce Department said Tuesday. It was the biggest increase in five months.

The stock market's gains were widely shared. All 10 industry groups in the S&P 500 rose, with health care and energy companies leading the way.

Smaller companies lagged behind the biggest ones Tuesday. The Nasdaq composite rose 17.18 points, or 0.5 percent, to 3,252.48.

And the Russell 2000 rose 3.97 points, or 0.4 percent, to 949.82. That's roughly half of the S&P 500's gain.

Big company stocks and small-company stocks often part ways, said Jack Ablin, chief investment officer at BMO Private Bank in Chicago. Big corporations generally have stronger ties to Europe, and their stocks wavered over the past week as traders kept an eye on negotiations to rescue Cyprus.

By contrast, smaller companies are less exposed to the rest of the world. "That's part of the reason small-caps have outpaced the market this year," Ablin said.

The S&P 500, used by investors as a proxy for the overall market, is up 9.6 percent so far this year. The Russell 2000 has fared better, rising 11.8 percent.

European markets rose modestly as investors gained confidence in the new bailout plan arranged for Cyprus and its banking system. The island country decided to keep its banks closed for another two days in an attempt to ward off panicked withdrawals.

Netflix (NFLX) surged 5 percent, leading the S&P 500, after an analyst at Pacific Crest Securities said the stock will likely climb as the company adds subscribers. Netflix's database of its members' viewing habits should give it an edge in creating new shows and draw more people to sign up for the video-streaming service, the analyst said. Netflix rose $9.82 to $190.61.
Housing prices rose in January at the fastest pace since the summer of 2006, before the housing bubble popped. The Standard & Poor's/Case-Shiller 20-city price index climbed 8.1 percent in the 12 months to January. That compares with a 6.8 percent increase the previous month. Prices rose in all 20 cities, led by Phoenix.

The economic reports out Tuesday added to evidence that the economy is slowly improving, and that's exactly what many investors want right now, LeClerc said. Slow growth means it will take a while before the Federal Reserve starts unraveling its bond-buying program and raising interest rates.

In the market for U.S. government bonds, the yield on the 10-year U.S. Treasury note slipped to 1.91 percent from 1.92 percent late Monday.

Among stocks making big moves:

- Drive-in restaurant chain Sonic (SONC) jumped 10 percent after reporting that its quarterly earnings more than doubled. Sales were flat but Sonic said its expects them to improve in the year ahead. Its stock rose $1.14 to $12.87.

- Supervalu (SVU) rose after announcing plans to lay off more than 1,000 people, roughly 3 percent of its workforce. The supermarket operator said its recent sale of five grocery chains means it needs fewer workers. Supervalu's stock gained 7 cents, or 1.4 percent, to $5.12.

- Children's Place Retail Stores (PLCE) sank 3 percent after the company reported weaker quarterly earnings. The retailer also said bad weather would crimp its sales. The company's stock lost $1.48 to $44.51.

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15 Comments

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scificarolinaguy

But, but, but they said if we re-elect President Obama the economy would crash...

Despite Republican obstructionism and all claims like the above, we are finally recovering from The Great Bush Recession.

March 26 2013 at 9:34 PM Report abuse rate up rate down Reply
Al

So, where are the fundamentals that justify this market action?

March 26 2013 at 8:15 PM Report abuse +1 rate up rate down Reply
JLS

I am getting the biggest laugh out of the posters here that are obviously whiny Republicans. They just can't acknowledge who put us in this hole and further, who is getting us out. Disgusting stupid types. It's what the GOP is filled with.

March 26 2013 at 7:44 PM Report abuse +5 rate up rate down Reply
JLS

Thank you, President OBAMA for helping all Americans dig out of this Bush/Cheney REPUBLICAN pit. Thank God for you.

March 26 2013 at 7:42 PM Report abuse +4 rate up rate down Reply
jajl218

As the Fed keeps pumping money into the market to falsely elevate its worth, our children's children's children keep having their pockets picked by the losers in our White House and Congress! Character has all but left the building!

March 26 2013 at 6:54 PM Report abuse -4 rate up rate down Reply
mastercommentor

this is not a record

March 26 2013 at 6:34 PM Report abuse -3 rate up rate down Reply
pwanless

So if the economy is back at pre-recession levels, why is the unemployment rate still pretty much at the same place it was during the recession?

March 26 2013 at 5:59 PM Report abuse +1 rate up rate down Reply
1 reply to pwanless's comment
tinplatertrains

Because unemployment always lags behind the stock market recovery. Seasonally adjusted unemployement rates have fallen from 10% 2009 to 9% 2011 to 7.9% 2012. A steady decline over the past two years. Just what are you talking about? You must be a Republican who just can't accept the fact that the economy appears to be on the verge of a real recovery for which the Reps can't take credit.

March 26 2013 at 9:27 PM Report abuse +1 rate up rate down Reply
Brian Corvello

Here we go again. The Market has a great day, but the Obama-haters are spoiling it, saying that a crash is inevitable, making you think they'd WANT a crash because they DO.

They'd so much love to say, "In your face, we were right" that they'd want us to collapse into financial ruin and people to go hungry just to do it.

Well, if it happens, I hope standing in bread lines for hours and sleeping in cardboard boxes does indeed make it worth it. Of course, seeing as your computer will be the first thing you'll have sold, you won't be able to.

March 26 2013 at 5:43 PM Report abuse +1 rate up rate down Reply
chloe

The wealthy become richer and the poor stay the same...That reality will blow up in everyone's face before too long...

March 26 2013 at 5:24 PM Report abuse +2 rate up rate down Reply
navan86

Another bubble ready to burst ,explode,kaboom and the people loose there investments LOL

March 26 2013 at 5:23 PM Report abuse -3 rate up rate down Reply
2 replies to navan86's comment
itacurubi

A bubble? Hoe do you then explain the fact that P-Es are well within the historical norm; that is, people are paying about the same price for a dollar's worth of earnings than they have in the past. In a bubble, the price of earnings go way above the historical norm. (So, for example, NASDQs P-E is now in the 24 range: at its peak in the 2000 bubble, it was 155.)

March 26 2013 at 6:02 PM Report abuse +1 rate up rate down Reply
tinplatertrains

I am totally amused by you folks that would prefer the title of the article to read "Stocks at all time low, unemployment soars, home sales flat". That's what you appear to be hoping for. Why can't you celebrate the fact that the economy actually appears to be at the start of a healthy recovery?

March 26 2013 at 9:30 PM Report abuse rate up rate down Reply