Stocks bounced back Tuesday after a sharp selloff Monday, with American Express leading the Dow after an analyst upgrade.
The market continued its recent pattern of shrugging off certain economic data and continuing in whichever direction it intended to go for the day.
Today's shrugoff was housing starts, which dropped 1 percentin July after an upwardly-revised 6.5-percent jump in June, falling well short of expectations.
While housing starts are off their lows from last year, the gains we've seen recently have "in all likelihood been a rebound from unsustainably weak results rather than the start of anything resembling a sustained “v-shaped” recovery," said Joshua Shapiro, chief economist at MFR Inc.
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"Gains from here on will probably be much more difficult to achieve, as poor labor market conditions, extremely tight credit, overly leveraged household balance sheets, and declining home prices all exert downside pressures."
Meanwhile, a gauge of inflation fell more than expected: Producer prices dropped by 0.9 percent last month, compared with a 1.8-percent gain in June. Economists had expected a 0.3-percent drop.
The market has been buzzing with talk of a correction after the runup since the March lows, and that finally started to materializeMonday as stocks tumbled 2 percent. Just as everyone was wondering if this would be the beginning of a 10-percent correction, the market turned higher.
American Express led Dow gainers, up about 5 percent, after two firms raised their targets on the stock, one being KBW, which also raised its rating to "outperform" from "market perform."
Other financials were also higher, with Bank of America and Citigroup both up about 3 percent.
Home Depot was also among the Dow's top percentage gainers after the home-improvement retailer reported its profit fell but beat analysts’ expectations.
Shares of Home Depot rival Lowe's, continued to slide after plunging 10 percent Monday when the company reported its profit plunged 19 percent, much worse than estimates.
In today's economic news, Target reported its eighth consecutive drop in quarterly profit but beat expectations.
And TJX , which operates TJ Maxx, Marshalls and Home Goods stores, reported its profit rose 31 percent as consumers continued to bargain shop. The results beat by a penny.
Dow component Hewlett-Packard and chip maker Analog Devices report after the bell.
- Peter Schacknow contributed to this report.
TUESDAY: Earnings from HP and Analog Devices after the bell
WEDNESDAY: Weekly mortgage applications; weekly crude inventories; Earnings from Deere, Limited
THURSDAY: Weekly jobless claims; leading indicators; Philly Fed survey; Earnings from Gamestop, Hormel, and Sears
FRIDAY: Existing-home sales; Earnings from JM Smucker
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