Wall St. Higher on Housing; FedEx Gains
Wall Street indexes pushed higher Monday, encouraged by a rise in new home sales and economic bellwether FedEx raising its outlook and giving rise to the notion that economic pessimism may have been overdone.
The company's fortunes are frequently tied to economic performance as its business in delivering packages by air and ground is indicative of US company activities. FedEx said it has seen higher-than-expected volume in its Express and Ground businesses and now expects to earn $4.60 to $5.20 per share—20 cents higher on each end of the forecast.
The other major piece of news for the day saw new housing sales rise 23.6 percentin June and inventory hit a 42-year low.
Analysts had worried that the stockpiling of houses on the market would keep prices depressed and hold down the market.
Home builders rallied sharply on the news, with Hovnanian and Beazer showing the strongest percentage gains. The SPDR Homebuilder exchange-traded fund reflected the positive sentiment for the industry.
That reaction came even amid concern that the data were being influenced by leftover effects of the homebuyer tax credit, which expired in April.
In a note to clients, Nomura Securities called the housing numbers "'noisy" and noted that "the housing sector is facing unprecedented weakness in demand."
The move higher for the major averages comes as Wall Street enjoyed a heady week that put the market on track for its best month since July 2009. The Standard & Poor's 500 gained 3.6 percent last week, while the Russell 2000 small-cap index rose a gaudy 6.6 percent.
With the gains, the Dow has turned modestly positive for 2010.
Industrials and health care led the S&P 500 higher while consumer staples and technology were the chief drag on the broad index, though all 10 sectors were positive.
Bank of America and CNBC.com-parent General Electric led Dow stocks. Wal-Mart and IBM were the index's biggest losers as the bluechips fought for gains.
The day's earnings calendar is extremely light in comparison to the rest of the week, which sees 157 S&P 500 companies report numbers, including five Dow components.
But earnings have been a significant boom to the market so far. First Call has raised its aggregate S&P 500 earnings outlook now to $20.63 from $19.60, which is about 5 percent higher than the first quarter.
In other news, US-traded shares of BP were higher amid speculation about whether CEO Tony Hayward is about to lose his job. Multiple reports said Hayward will be stepping down, but the latest statement issued by the company says Hayward remains CEO and has the full confidence of the Board and senior management. London-traded shares of BP also gained.
Ford begins a high-profile marketing campaign Monday for the redesigned Ford Explorer, which the automaker hopes to be the symbol of a new generation of fuel-efficient SUVs.
Elsewhere, Goldman Sachs shares fell on news that the Financial Crisis Inquiry Commission may bring in independent auditorsto scrutinize the Wall Street giant's derivatives trading, according to a report in the Financial Times.
Earnings continued to impact the market, with shares of beauty care products maker Alberto Culver and diversified industrial company Roper Industries both gaining on positive surprises.
Market breadth was strongly bullish, with gainers beating losers more than 3 to 1. New York Stock Exchange volume was 82 percent positive.
Oil prices surrendered some of their gainsfrom last week in the anticipation of heavy weekend storms. Treasurys turned lower, with the 10-year yield at 3.00 percent. The US dollar edge loweragainst a basket of foreign currencies.
European shares were flat to slightly lower Monday as investors digested the impact of Friday's European Union bank stress-test results. One analyst told CNBC that the tests were a missed opportunity and banks should have been forced to raise capital. Asian shares ended mixed, but mostly higher.