Home sales report helps boost stocks
Data on durable goods also spark 142-point rise in Dow
New York ? Wall Street ended its calmest week in a month with a big advance Friday, rising on solid economic readings that countered the bleak sentiment that has blanketed the financial markets. The Dow Jones industrial average rose more than 140 points in a lightly traded session.
Stocks started flat but jumped after a stronger-than-expected reading on new homes sales for July. That report followed a reading showing orders to factories for big-ticket goods rose sharply in July.
The stock market’s gains Friday after several stable or positive sessions suggested that Federal Reserve policymakers and stock market investors have perhaps struck a truce – with the Fed acknowledging it stands ready to try to fend off a calamitous seizing up of the credit markets and investors willing to focus on readings on the health of the economy before making decisions.
“I think we’ve stabilized a bit since the Fed has lowered the discount rate,” said Nicholas Raich, director of equity research at National City Private Client Group in Cleveland, referring to the Fed’s decision a week ago to cut the interest it charges to lend directly to banks. “That has calmed the market and eased some fears because we have a Fed that is willing to step in and help out.”
After weeks of volatility in which triple-digit drops in the Dow became the norm, stocks showed more modest moves this week.
The Dow on Friday rose 142.99, or 1.08 percent, closing at 13,378.87. The Standard & Poor’s 500 index rose 16.87, or 1.15 percent, to 1,479.37. The Nasdaq composite index rose 34.99, or 1.38 percent, to 2,576.69.
For the week, the Dow rose 2.29 percent, its biggest weekly point gain since mid-April. The blue chips now sit about 622 points, or 4.7 percent, below their July 19 record close.
The S&P 500 and the Nasdaq saw their biggest weekly point gains since the weeks that ended March 23. The S&P rose 2.31 percent, and the Nasdaq added 2.86 percent.
In economic news, the Commerce Department said new home sales rose 2.8 percent in July, after falling 4 percent in June. A second report showed that orders for durable goods – those expected to last at least three years – jumped 5.9 percent in July, the biggest increase in 10 months.
The housing report appeared to ease concerns that the U.S. economy might tip into recession because of a skidding housing market and tightening access to credit.