Upturn in homes sales sends stocks slightly higher
By CHRISTINA REXRODE AP Business Writer April 26, 2012 9:36AM
In an April 23, 2012 photo, trader Andrew Silverman, center, works on the floor of the New York Stock Exchange Monday, April 23, 2012. Wall Street appeared headed for a slightly higher open Thursday, April 26, 2012 with Dow Jones industrial futures rising 0.1 percent and S&P 500 futures up 0.1 percent (AP Photo/Richard Drew)
Updated: April 26, 2012 11:46AM
NEW YORK (AP) — U.S. stocks edged higher Thursday morning despite mixed signals on the economy. A batch of bright earnings reports and encouraging news about home sales sent some stocks higher, but the gains were checked by a disappointing report on unemployment claims, a broad decline across European markets and losses at some well-known companies.
The Dow Jones industrial average fell in the first few minutes of trading, then climbed steadily through late morning. It was up 39 points at 13,129 as of 11 a.m. The Standard & Poor’s 500 waffled between small gains and losses, and was up one point at 1,392. The Nasdaq composite index, still riding momentum from Apple’s strong quarterly earnings this week, rose seven to 3,036.
A report on pending home sales at 10 a.m. pushed the market slightly higher. An index maintained by the National Association of Realtors to measure the number of people who signed contracts for homes rose to its highest level in nearly two years.
Investors cautioned that the housing market, which helped drive the economy into recession, is hardly fully recovered. Natalie Trunow, chief investment officer of stocks at Calvert Investments in Maryland, said the rebound in housing will be “disappointingly slow and gradual.”
“Is it going to be a large positive (for markets)? Probably not,” Trunow said. “But at least it’s not going to be negative.”
The housing report pushed homebuilders higher. PulteGroup rose nearly 6 percent and Lennar rose 4 percent. A few other well-known names also rose. Equifax, the credit monitoring company, and Electronic Arts, the company behind video games like SimCity, both gained about 5 percent.
Broad market barometers were mixed. The number of stocks that rose on the New York Stock Exchange was only slightly higher than the number that fell. Half of the 10 industry groups in the S&P 500 index rose and the other half fell.
For those looking for bad news, there was plenty to be found.
Several big-name companies fell after reporting first-quarter earnings. Aetna, the health insurer, was one of the biggest losers in the morning. It plummeted 10 percent after reporting that it is paying more in medical claims.
Earnings reports at other companies underscored concerns that Europe’s debt crisis will ripple across the ocean. Dow Chemical, the nation’s largest chemical maker, and UPS, the package delivery company, both fell on concerns about a cooling down in Europe.
Most European markets slipped following disappointing results from several major companies including Banco Santander and Deutsche Bank.
The banks are a proxy for broader concerns about Europe. Analysts worry that Spain might join Greece, Ireland and Portugal in asking for a bailout. Even in Germany, one of the most stable of the 17 countries that use the euro, the pressure of the debt crisis has made bank customers reluctant to trade and invest.
In the U.S., the government reported that the number of people seeking unemployment benefits was little changed last week, stoking more uncertainty about when and if companies will return to pre-recession levels of hiring.
The market had a white-hot ride in the first three months of the year as investors shrugged off the previous year’s concerns about Europe and gridlock in Washington over fiscal policy. However, some of those concerns appear to be resurfacing. Wall Street’s three main stock indexes are all down so far for the second quarter, which started at the beginning of April.
Trunow said investors will probably continue to be cautious until they have more clarity on those and other issues.
“We have an election coming up, we have the expiration of the Bush tax cuts and payroll breaks, we have the budget negotiations coming up soon,” Trunow said. “All of this is going to give markets indigestion.”