NEW YORK — More evidence that the housing market is recovering boosted stocks on Wall Street today. Gains for discount retailers also pushed indexes higher after Dollar Tree posted strong earnings.
The Dow Jones industrial average rose 130 points, or 0.9 percent, to 14,031 as of 12:30 p.m. EST. The Standard and Poor's 500 index gained 17 points, or 1.1 percent, to 1,514. The Nasdaq composite rose 40 points, or 1.3 percent, to 3,169.
Dollar Tree jumped $5 to $46.09 after the discount retailer reported a 22 percent profit increase as consumers spent more at its stores. Dollar General followed suit, gaining $2.12 to $47.07, and Family Dollar Stores rose $1.55 to $57.83.
The number of Americans who signed contracts to buy homes rose in January from December to the highest level in almost three years. The National Association of Realtors’ index for pending home sales rose 4.5 percent to the highest point since April 2010.
The news sent home builder stocks higher for the second day in a row. PulteGroup rose 48 cents to $19.53, a day after rising 5.7 percent on news that sales of new homes jumped 16 percent last month to the highest level since July 2008.
Stocks have mostly recouped their losses for the week following a sell-off on Monday. The Dow and the S&P 500 logged their biggest losses in more than three months at the start of the week after elections in Italy left the country in political gridlock.
“The market psychology has clearly shifted. It's no longer sell the rally, it's buy the dips,” said Dan Veru, chief investment officer of Palisade Capital Management. “The economic data continues to be strong.”
The Dow is up 6.9 percent since the start of the year, and is about 1 percent from its record close of 14,164 reached in October 2007. The S&P 500 is 5.9 percent higher for the year, and is about 3 percent short of its record close of 1,565.
In addition to the housing recovery, rising company earnings and an improving the job market have also given investors a reason to buy stocks.
Wall Street analysts predict that earnings for S&P 500 companies will climb 7.8 percent in the fourth quarter, the third straight quarter of growth.
Investors are also following Federal Reserve Chairman Ben Bernanke's testimony to Congress today.
Bernanke is giving the second of two days of semiannual testimony to Congress about the Fed's interest rate policies, this time to the House Financial Services Committee. On Tuesday, Bernanke told a Senate committee that he thinks the Fed's low-interest-rate policies are giving crucial support to an economy still burdened by high unemployment.
The yield on the 10-year Treasury note was little changed at 1.88 percent.
Among other stocks making big moves;
— Priceline.com rose $21.43 to $699 after it said late Tuesday that its net income jumped in the fourth quarter as bookings grew.
— First Solar plunged $4.89 to $26.49 after the company posted disappointing sales for the fourth quarter and gave a weak early outlook for the year.
— Target fell 67 cents to $63.37 after the No. 2 discount chain's quarterly income fell 2 percent as it dealt with intense competition during the holiday shopping season.
— DreamWorks Animation fell 56 cents to $16.03 after it posted a loss of $82.7 million. The company booked a write-off on its November release “Rise of the Guardians” and on an upcoming movie that needs to be reworked.
Guidelines: Please keep your comments smart and civil. Don't attack other readers personally, and keep your language decent. Comments that violate these standards, or our privacy statement or visitor's agreement, are subject to being removed and commenters are subject to being banned. To post comments, you must be a registered user on toledoblade.com. To find out more, please visit the FAQ.