Stocks recover much ground after worst day of the year
NEW YORK — Strong housing and earnings reports helped stocks rebound from their worst day of the year.
The Dow Jones industrial average rose 157.58 points, or 1.1 percent, on Tuesday, to 14,756.78, winning back more than half of the 265 points it lost a day earlier. The Standard & Poor's 500 index logged its second-best day of the year.
Home construction topped 1 million last month, the highest level since June 2008. Robust earnings from companies including Coca-Cola also propelled the market higher.
A recovery in housing and a pickup in hiring were major catalysts driving the stock market's surge early this year. The Dow and the S&P 500 jumped 11.3 percent and 10.3 percent, respectively, in the first three months of 2013.
That run-up was interrupted Monday when stocks had their biggest decline since November.
Worries about an economic slowdown in China led to a drop in prices for oil, copper and other commodities, causing mining and energy stocks to fall. The rally had slowed earlier this month after reports of weak hiring and retail sales suggested that the economy was cooling off.
“This is the first time in a while that we've had pretty positive numbers,” said JJ Kinahan, chief derivatives strategist for TD Ameritrade. “We had one bad day yesterday. You can't say because of that one bad day that all bets are off.”
While Chinese growth fell short of expectations, Monday's sell-off may have been disproportionate to the slight slowdown in China's growth.
The world's second biggest economy still expanded at a rate of 7.7 percent in the first three months of the year, slowing from 7.9 percent the previous quarter and missing analysts' expectations by just 0.3 percentage points. China is watched closely because it is a major market for foreign goods from iron ore to smartphones. Investors hope demand from China can help offset weakness in the United States, Europe and Japan.
Mining companies rose Tuesday as commodities markets stabilized.