Stocks surge to 18-month highs

By Alexandra Twin, senior writer


NEW YORK (CNNMoney.com) -- Stocks rallied Tuesday, with the Dow, Nasdaq and S&P 500 ending at new 18-month highs following the release of a better-than-expected existing home sales report that suggests a slow economic rebound.

The Dow Jones industrial average (INDU) rose 103 points, or 1%, ending at 10,888.83, the highest close since 11,143.13 on Sept. 26, 2008.

How do you feel about your job?
  • Like it a lot
  • Stuck in it, but need the money
  • Can't stand it, looking elsewhere
  • Unemployed

The S&P 500 index (SPX) gained eight points, or 0.7%, and ended at 1,174.17, its highest close since 1,213.09 on Sept. 26, 2008.

The Nasdaq composite (COMP) rose 20 points, or 0.8%, ending at 2,415.24, its highest close since 2,416.98 on Aug. 18, 2008.

Stocks initially struggled out of the gate Tuesday but turned higher following the release of the housing report, which showed existing home sales fell in February from January levels but still topped estimates.

The report was consistent with other recent readings that show the economy is improving, but at a slow pace. Investors are looking for signs of increased growth in the aftermath of a rally that pushed the Dow 65% off its lows of a year ago to 2010 highs hit on Monday. In that same period, the S&P 500 has gained 72% and the Nasdaq has gained 89%.

Stocks have steadily drifted higher over the last month or so after sliding between mid-January and early February. The Dow has now gained in 9 of the last 10 sessions through Tuesday's close, while the S&P 500 and Nasdaq composite have gained in 8 of the last 10 sessions.

"The recent uptick has been more a function of less bad news rather than a lot of good news," said Dean Barber, president at Barber Financial Group.

He said that unemployment, the weakness in housing and the possible spread of Greece's debt problems remain worries for investors, but they've been pushed aside for the time being.

Housing: Existing home sales fell to a 5.02 million unit rate in February from a 5.05 million unit rate in January, according to a National Association of Realtors report released Tuesday. Economists surveyed by Briefing.com thought sales would fall to a 5 million unit rate.

The continued weakness in the housing market has been one of the main worries for investors as they look for signs this year that the economic recovery has some durability. While the report showed a slight decline from the previous month, it still managed to beat forecasts despite severe snowstorms in much of the nation.

Washington: On Tuesday, President Obama signed into law a health care bill that will extend coverage to 32 million more people, require all Americans to have coverage and will prevent companies from denying coverage based on pre-existing conditions.

Stocks rallied Monday after Congressional approval of the bill removed the uncertainty that has surrounded its passage for months.

After Monday's close, the Senate Banking Committee approved a regulatory reform bill put forth by Sen. Christopher Dodd, D-Conn., passing it on to the full Senate for the vote.

On Tuesday, Treasury Secretary Timothy Geithner said that an overhaul of mortgage companies Fannie Mae and Freddie Mac could shape up later this year, although the process of redesigning government-backed mortgage financing is going to be complicated.

Company news: KB Home (KBH) reported a narrower quarterly loss versus a year earlier that was nonetheless weaker than analysts' estimates, with lower revenue that also missed expectations. The homebuilder said prices and demand for its houses fell in the first quarter. Shares slipped 1.7% Tuesday.

Stock gains were broad based Tuesday, with all but two of the Dow's 30 components rising.

Component Caterpillar (CAT, Fortune 500) rose after a Wells Fargo analyst said the stock is a good long-term buy. Other Dow gainers included IBM (IBM, Fortune 500), Coca-Cola (KO, Fortune 500), 3M (MMM, Fortune 500) and Procter & Gamble (PG, Fortune 500).

Market breadth was positive. On the New York Stock Exchange, winners beat losers seven to three on volume of 985 million shares. On the Nasdaq, advancers topped decliners by two to one on volume of 2.31 billion shares.

The dollar and commodities: The dollar rallied versus the euro and the yen.

U.S. light crude oil for May delivery rose 31 cents to settle at $81.91 a barrel on the New York Mercantile Exchange.

COMEX gold for May delivery rose $4.20 to settle at $1,103.70 per ounce.

Bonds: Treasury prices fell, raising the yield on the 10-year note to 3.67% from 3.66% late Monday. Treasury prices and yields move in opposite directions.

World markets: In overseas trading, European markets ended higher. London's FTSE rose 0.5%, France's CAC 40 rose 0.6% and Germany's DAX added 0.5%. Asian markets were mixed, with Hong Kong's Hang Seng index up 0.3% and Japan's Nikkei down 0.5%.  To top of page

Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.80%3.88%
15 yr fixed3.20%3.23%
5/1 ARM3.84%3.88%
30 yr refi3.82%3.93%
15 yr refi3.20%3.23%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 28,015.06 337.27 1.22%
Nasdaq 8,656.53 85.83 1.00%
S&P 500 3,145.91 28.48 0.91%
Treasuries 1.84 0.05 2.50%
Data as of 12:51am ET
Company Price Change % Change
Bank of America Corp... 33.67 0.58 1.75%
General Electric Co 11.10 0.31 2.87%
Advanced Micro Devic... 39.63 0.01 0.03%
Ford Motor Co 9.02 0.09 1.01%
Apple Inc 270.71 5.13 1.93%
Data as of Dec 6

Sections

Bankrupt toy retailer tells bankruptcy court it is looking at possibly reviving the Toys 'R' Us and Babies 'R' Us brands. More

Land O'Lakes CEO Beth Ford charts her career path, from her first job to becoming the first openly gay CEO at a Fortune 500 company in an interview with CNN's Boss Files. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.