While you were sleeping: Housing market momentum
Feb 27 (BusinessDesk) – Wall Street rose after a report showed an unexpected rise in US new home purchases in January, easing concern that the industry’s recovery was stalling.
New homes sales soared 9.6 percent to a seasonally adjusted annual rate of 468,000 units in January, according to Commerce Department data. That marks the highest level since July 2008. So much for the impact of harsh winter weather.
In further good news, December's sales were revised higher to a 427,000-unit pace, up from the previously reported 414,000.
In afternoon trading in New York, the Dow Jones Industrial Average added 0.33 percent, the Standard & Poor’s 500 Index gained 0.37 percent, while the Nasdaq Composite Index rose 0.65 percent. The US dollar gained 0.6 percent against the euro, while strengthening 0.3 percent against the yen.
Gains in shares of Home Depot, last up 1.7 percent, and those of Caterpillar, last up 1.4 percent, led the Dow higher.
Shares of Lowe’s jumped, last up 6 percent, after the company reported better-than-expected quarterly earnings and announced a stock buyback.
“Some of the recent housing and jobs data has softened a little bit, but we still think the consumer is going to be there and 2014 is going to be a great year,” Lowe’s CEO Robert Niblock told Bloomberg News in an interview. “It made more sense to come out slightly more cautious with our guidance and then deliver numbers above.”
Investors await Federal Reserve Chair Janet Yellen’s rescheduled testimony before the Senate Banking Committee on Thursday to gauge US policy makers’ take on the recent US economic data. Earlier this month, Yellen’s semi-annual testimony to the House showed optimism about the outlook for the US recovery.
Shares of Target climbed, with its shares 6.7 percent higher, after the company provided an earnings outlook that exceeded expectations. The company is recovering from a security breach late last year.
“During the first half of the fourth quarter, our guest-focused holiday merchandising and marketing plans drove better-than-expected sales. However, results softened meaningfully following our December announcement of a data breach,” Gregg Steinhafel, Target’s CEO, said in a statement.
“As we plan for the new fiscal year, we will continue to work tirelessly to win back the confidence of our guests and deliver irresistible merchandise and offers, and we are encouraged that sales trends have improved in recent weeks.”
US Treasuries gained as the sale of US$35 billion in five-year bonds drew solid demand. The sale’s bid-to-cover ratio was 2.98, the highest since September 2012, while the notes yielded 1.53 percent, the lowest since November, according to Bloomberg News.
In Europe, the Stoxx 600 Index finished the session with a 0.2 percent decline from the previous close. Germany’s DAX and France’s CAC 40 both dropped 0.4 percent, while the UK’s FTSE 100 fell 0.5 percent.