Market rises: Focus less on Fed chatter, more on economy
NEW YORK — Wall Street got back to focusing on the economy instead of the Federal Reserve on Tuesday, sending stocks higher.
Four reports showed a brightening economy. Housing and manufacturing continued to improve, and consumer confidence reached its highest level in 5 1⁄2 years.
The major stock indexes closed higher, with the Dow Jones industrial average shooting up 100.75 points, or 0.7 percent, to 14,760.31. The Standard & Poor's index rose 14.94 points, or 1 percent, to 1,588.03.
The triple-digit rise in the Dow continues a bout of market volatility caused by investors and traders who are worried about the Fed ending its economic stimulus. Last Wednesday, Chairman Ben Bernanke said he expects the Fed to end its bond buying by the middle of 2014 if it feels the economy can manage without that stimulus.
The Dow then plunged by triple digits on three of the next four trading days, with investors worried that the market would struggle without the Fed propping it up.
Some investors have concluded that the recent sell-offs were overblown. Quincy Krosby, a market strategist at Prudential Financial, guessed that shorter-term traders were the ones buying stocks because they judged that parts of the market were “oversold.”
Long-term investors likely are still sitting on the sidelines, waiting for further signs that markets are becoming less volatile, she said.
Among the biggest gainers were big dividend payers such as phone and power companies. They have been hit the hardest by the recent sell-off.
The big economic reports revealed:
• Orders for durable goods rose 3.6 percent in May, matching April's gain. The gauge is important because manufacturing has generally struggled this year as demand for American exports slows in other parts of the world.
• Home prices rose 2.5 percent in April compared with March, the biggest month-over-month gain since 2000, according to the S&P/Case-Shiller index of 20 cities.
• The Conference Board's consumer confidence index jumped to 81.4 in June, the best reading since January 2008. The May reading, however, was revised to 74.3 from the original estimate of 76.2.
• Sales of new homes rose in May to a seasonally adjusted annual rate of 476,000, the Commerce Department said. That was the fastest pace since July 2008. Though sales of new homes remain below the 700,000 annual rate that is considered healthy, the pace has jumped 29 percent from a year ago.
The stronger economic news led investors to sell government bonds, a sign that they're more comfortable putting money in stocks. The yield on the 10-year Treasury note, a benchmark for many types of loans, rose to 2.6 percent from 2.54 percent on Monday.
Investors have been selling bonds in anticipation of the Fed winding down its bond-buying program.
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