Home Depot leads Dow higher
NEW YORK — A jump in home sales and strong earnings from Home Depot helped the Dow claw back more than half of its losses from Monday. Improving consumer confidence also brought back buyers to the market.
The Dow Jones industrial average closed up 115.96 points, or 0.8 percent, to 13,900.13. The Dow fell 216 points the day before, its biggest drop in three months, on concern the European debt crisis may flare up again. The index has moved 100 points or more on four out of the past five trading days.
The Standard & Poor’s 500 index rose 9.09 points, or 0.6 percent, to 1,496.94. The Nasdaq composite was up 13.40 points, or 0.4 percent, at 3,129.65.
Home Depot, the biggest home improvement store chain in the country, jumped $3.64, or 5.7 percent, to $67.56 after reporting its income rose 32 percent in the latest quarter thanks to strong U.S. sales and the cleanup that followed superstorm Sandy. That made it the biggest gainer in the Dow, accounting for about 28 points, or about a quarter, of its advance.
“Companies on the whole, particularly U.S. companies, are doing well,” Michael Mussio, a portfolio manager at FBB Capital, said.
Strong earnings from home improvement companies, such as Home Depot and Lowe’s, which reported earnings Monday that beat Wall Street forecasts, compounded evidence that the U.S. housing market is maintaining its recovery, Mussio said. Also Tuesday, the government reported sales of new homes jumped 16 percent last month to the highest level since July 2008.
The report boosted housing companies, which led the S&P 500 higher. PulteGroup rose $1.03, or 5.7 percent, to $19.05, edging out Home Depot as the biggest gainer in the index. D.R. Horton advanced 88 cents, or 4.12 percent, to $22.25 and Lennar Corp. rose $1.35, or 3.7 percent, to $38.01.
The rebounding housing sector has been an important factor behind a rally that pushed the Dow above 14,000 last week, close to its record high close of 14,164 reached in October 2007. The Dow is still up 6 percent this year, even after Monday’s sell-off. The S&P 500 is up 5 percent.
Also Tuesday, a measure of consumer confidence rose sharply, reversing three months of declines, as shoppers began adjusting to a payroll tax hike last month.