Traders work on the floor of the New York Stock Exchange Tuesday, Feb. 26, 2013. Strong earnings reports from Home Depot and Macy's helped lift stock indexes in early trading on Wall Street Tuesday. A jump in home sales and consumer confidence also brought buyers back to the market. (AP Photo/Richard Drew)
NEW YORK — Strong earnings from Home Depot helped lift the Dow on Wall Street today. A jump in home sales and consumer confidence also brought buyers back to the market after a big sell-off Monday.
The Dow Jones industrial average was up 90 points, or 0.7 percent, to 13,878 as of 12:37 p.m. The Dow fell 216 points the day before, its biggest drop in three months, on concern that the European debt crisis may flare up again.
The Standard & Poor's 500 index rose five points, or 0.3 percent, to 1,492. The Nasdaq composite was up a point, or 0.04 percent, at 3,117.
Home Depot, the biggest home improvement store chain in the country, jumped $3.79, or 6 percent, to $67.71 after reporting that its income rose 32 percent in the latest quarter thanks to strong U.S. sales and the cleanup that followed Superstorm Sandy. Macy's results also beat analysts’ forecasts, and its stock rose $1.23, or 3 percent, to $39.75.
“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 today, the government reported that sales of new homes jumped 16 percent last month to the highest level since July 2008.
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 5.8 percent this year, even after Monday's sell-off. The S&P 500 is up 4.5 percent.
Also today, a measure of consumer confidence rose sharply, reversing three months of declines, as shoppers began adjusting to a payroll tax hike last month.
Investors closely watched testimony by Federal Reserve Chairman Ben Bernanke. The Fed chairman said that the automatic government spending cuts due to take effect Friday would put a drag on the economy. He urged lawmakers and the White House to replace the cuts with longer-term policies to reduce the budget deficit.
While U.S. market rose, European markets fell again as investors worried about Italy's political situation. The country is facing political gridlock after elections left Parliament with no clear-cut winner.
U.S. stocks slumped Monday after election results in Italy showed a race too close to call. That left investors fearful that the country, the euro region's third-largest, will struggle to form a government that can move forward with reforms to revive the economy, rekindling the region's debt crisis and worries over the viability of its shared currency, the euro.
Italy's main stock index dropped 4.9 percent today. The yield on Italy's benchmark government bond rose sharply, to 4.83 percent from 4.43 percent the day before, as investors sold them. That's still far below the 7 percent the yield traded at in January 2012, when confidence in Italy's finances was far lower. The euro was little changed against the dollar.
Other European indexes also fell, but not as much. Stocks fell 2.3 percent in Germany, 2.7 percent in France, and 1.3 percent in Britain.
In U.S. government bond trading, the yield on the 10-year Treasury note was flat at 1.86 percent.