Stock market rebounds from worst day of the year
By STEVE ROTHWELL
The Associated Press | April 17,2013
Michael Capolino, right, works with fellow traders on the floor of the New York Stock Exchange Tuesday. Stocks are sharply higher, a day after the market’s worst drop this year, as the government reported a surge in home construction last month.
NEW YORK — Strong housing and earnings reports helped stocks rebound from their worst day of the year.
The Dow Jones industrial average rose 129 points, or 0.9 percent, to 14,728 on Tuesday afternoon, winning back about half of the 265 points it lost a day earlier.
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 Standard & Poor’s 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 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 trend revealed by the data.
The world’s biggest economy still expanded at a rate of 7.7 percent in the first three months of the year, missing analysts’ expectations by just 0.3 percentage points. China is watched especially closely because it is a major market for foreign goods from iron ore to smartphones and is relatively healthy. Investors hope demand from China can help offset weakness in the U.S., Europe and Japan.
Mining stocks were rising Tuesday as commodities markets stabilized. Gold, which was at the epicenter of Monday’s sell-off, rose $26.30 to $1,387.40 an ounce.
The precious metal logged its steepest fall in 30 years Monday, plunging 9.4 percent. Gold had been drifting lower since the start of the year and the decline accelerated Friday after the government reported a drop in inflation. People often buy gold when they’re fearful of rising prices and sell it when they see inflation ebbing.
Gold is down 27 percent since it climbed to a record in August 2011, when lawmakers wrangled over raising the debt ceiling and threatened to push the U.S. into default.
Copper edged up 3 cents to $3.30 a pound. Crude oil fell 12 cents to $88.58 a barrel.
Materials stocks rose the most of the 10 industry groups in the S&P after leading the market lower the day before. Freeport-McMoRan Copper & Gold was up 0.8 percent at $29.50, a day after plunging 8 percent, the biggest drop in the S&P 500 index.
Home builders rose following the housing report. PulteGroup rose 66 cents to $18.51 and Lennar climbed 45 cents to $38.23.
In other trading, the Standard & Poor’s 500 climbed 19 points, or 1.2 percent, to 1,571. The Nasdaq composite rose 42 points, or 1.3 percent, to 3,254.
Small company stocks rose more than the broader market, a sign that investors are moving money into riskier assets. The Russell 2000 index climbed or 1.4 percent to 920.13. That’s a reversal from the day before, when the index plunged 3.8 percent.
Traders on the floor of the New York Stock Exchange observed a moment of silence to honor the victims of Monday’s bombing attacks at the Boston Marathon.
Among stocks making big moves:
Coca-Cola gained $2.14 to $42.23 after its first-quarter results came in above Wall Street’s forecasts. Coke said it struck a deal to start refranchising its business in the U.S., which will lower costs.
W.W. Grainger Inc., which sells power tools and other industrial equipment, rose $17.36 to $243 after the company said its first-quarter net income climbed 13 percent.
U.S. Bancorp dropped 71 cents to $32.60 after the lender reported first-quarter earnings that fell short of analysts’ expectations. The Minneapolis bank’s net income rose 7 percent to $1.43 billion as it set aside less cash to cover soured loans. Whirlpool Corp. jumped $2.94 to $116 after the appliance maker raised its quarterly dividend 25 percent to 62.5 cents.
Yields on U.S. government bonds rose as investors moved money out of safe-haven investments. The yield on the benchmark 10-year Treasury note climbed to 1.73 percent from 1.68 percent.