Stocks Shoot Higher as Home Sales Pop
Stocks pushed toward higher ground as investors weighed a big jump in home sales against weaker-than-expected economic growth.
The National Realtors Association said home sales rose 7.4 percent in November—much better than expected—though the gains came mostly from the low end of the market and one in three sales was off a foreclosure.
At the same time, the Commerce Department said the final print on third-quarter gross domestic product came in at 2.2 percent, well below expectations of 2.7 percent and about 22 percent lower than the 2.8 percent initially reported. The Richmond Fed also weighed in with its index of economic activity that was significantly lower than expected.
Markets were initially little moved by the data but the Dow later added to its earlier gains. Stocks traded in a narrow range through the morning on light volume.
The dollar was mixedas light trading swept across the financial markets. The Chicago Board Options Exchange's Volatility Index brifely dipped below 20, a number generally considered the yardstick for high fluctuation. The VIX is considered the market's most reliable measure of investor fear.
The S&P 500 hit its 2009 high early in the session, a day after the Nasdaq accomplished the same feat.
The steeper yield curve and the potential of higher interest rates both indicated a stronger economy and kept gains in check amid the GDP uncertainty.
Ford shares gained after the company said it was offering buyouts and early retirement options to all 41,000 of its US factory workers. UBS also increased its price target for Ford from $9 to $12.
The biggest gainers on the Dow included DuPont and Boeing. Boeing is planning to conduct a second test flight of its 787 Dreamliner in Washington, scheduled for 11:45 am New York time in Everett, Wash.
Only four components on the bluechip index were in negative territory during the early minutes of trading, with Alcoa being the biggest drag.
Among unusual percentage gainers, Danish mobile hydraulics firm Sauer Danfoss saw its shares jump on an announcement that industrial components company Danfoss would acquire the remaining shares it does not already own for $10.10 a share in a deal worth more than $118 million.
Ireland's banks were being traded actively after the government said the two institutions in which it has interest, Allied Irish Banks and Bank of Ireland, will be strong enough to sell their government stakes in a year or two but will need to raise capital.
Home builder stocks were up on the housing data, with Pulte Homes leading the group. The SPDR Homebuilders ETF was up more than 2 percent in afternoon trading.
Jabil Circuit shares rose as it posted better-than-expected earnings for its first quarter.
Yahoowill be shutting down its offices from Dec. 25 to Jan. 1 in a cost-cutting move. Yahoo told CNBC it informed employees of the company's first mandatory shutdown this past summer.
Toyota is seeking to cut its auto parts costs by 30 percent in an effort to regain profitability, and is asking its suppliers for help in that area.
Market volume was anemic, with about 415 million shares changing hands by 1 pm ET on the New York Stock Exchange. Breadth was positive, with gainers beating losers 1.5 to 1, and there were 220 new highs against just two new lows.