Stocks boosted by housing, autos
Wall Street inches higher as investors eye an increase in pending home sales and a smaller-than-expected decline in auto sales.
NEW YORK (CNNMoney.com) -- Stocks gained Tuesday, managing an advance at the end of a choppy session after a positive housing report and a series of not-as-bad-as-expected auto sales reports gave investors some optimism.
The Dow Jones industrial average (INDU) added 19 points or 0.2%. The index briefly turned positive for the year for the first time since Jan. 7.
Stocks had seesawed on both sides of the unchanged line throughout the session, managing gains just after the release of the housing market report and then again through the close.
The fact that stocks were mostly hanging in after Monday's big move was positive, said Ron Kiddoo, chief investment officer at Cozad Asset Management.
Pending home sales jumped 6.7% in April, and posted year-over-year increases in every region but the West, according to a National Association of Realtors report released on Tuesday. The report added to hopes that the housing market is starting to find its footing.
The collapse of the housing market set the recession in motion and investors have been looking for signs that it is nearing a recovery.
Stocks in the U.S. and abroad jumped Monday after upbeat reports on manufacturing, construction and consumer spending added to hopes that the pace of the recession is slowing.
Such bets have helped lift the stock market over the past three months, after the Dow and S&P 500 slumped to more than 12-year lows.
"On an almost daily basis, we're seeing signs of a lessening of the recession," Kiddoo said. "It's not the same as a recovery, but it's a sign that we're moving in the right direction."
Wednesday brings a number of closely-watched economic reports. The standout is the May report on private-sector employment from payroll services firm ADP.
Employers are expected to have cut 525,000 jobs after cutting 491,000 jobs in the previous month. The report sets the tone for the broader May non-farm payrolls report due out on Friday.
Other reports on tap for Wednesday include the May manufacturing report from the Institute for Supply Management and the weekly crude inventories report from the Energy Information Administration.
Financials: Three more banks announced plans to repay the government bailout money.
JPMorgan Chase (JPM, Fortune 500) said late Monday it plans to raise $5 billion toward the $25 billion it owes the government. American Express (AXP, Fortune 500) also said late Monday that it will raise $500 million toward the $3.4 billion it owes.
The Federal Reserve is expected to announce next week which of the 19 banks that it stress tested are in good enough shape to pay back bailout funds. In order for banks to pay back the government, they must prove that they can raise money without depending on guarantees against losses provided by the Federal Deposit Insurance Corp. (FDIC).
Citigroup will be kicked out of the Dow, with home, auto and commercial insurer Travelers (TRV, Fortune 500) taking its place starting Mon., June 8. The government now owns a large stake in Citi and the company is undergoing a restructuring.
GM: General Motors (GMGMQ) is selling its Hummer truck brand to Chinese industrial company Sichuan Tengzhong. The deal was announced one day after GM filed for bankruptcy protection, bringing an end to an era for the automaker.
The bankruptcy is seen as necessary by lawmakers who say the industry requires a broad overhaul. GM's bankruptcy will result in 20,000 job losses and the closure of 12 plants.
GM is now trading under the symbol GMGMQ, as of Tuesday. It will be removed from the S&P 500 at the close of trading Tuesday and is also being kicked out of the Dow. Cisco Systems (CSCO, Fortune 500) takes its place in the Dow starting Monday.
Separately, GM said that May auto sales fell 29% from a year ago, versus forecasts for a drop of nearly 37%. The May performance was the automaker's best of the year.
Auto sales: Other companies also reported narrower-than-expected sales drops.
Chrysler - which filed for bankruptcy April 30 - said sales dropped 47% from a year ago, versus forecasts for a slide of almost 54%. It was the automaker's best monthly performance of the year.
The exception was Toyota Motor (TM), which slumped 40.7%, roughly in line with forecasts for a slide of 40.6%.
Market breadth was positive. On the New York Stock Exchange, winners beat losers three to two on volume of 1.41 billion shares. On the Nasdaq, advancers topped decliners five to four on volume of 2.42 billion shares.
Bonds: Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.61% from 3.67% Monday. Treasury prices and yields move in opposite directions.
Other markets: In global trading, Asian and European markets ended mixed.
In currency trading, the dollar fell versus the euro and yen.
U.S. light crude oil for July delivery fell 3 cents to settle at $68.55 a barrel on the New York Mercantile Exchange.
COMEX gold for August delivery rose $4.40 to settle at $984.40 an ounce.