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U.S. Stocks Jump After Housing Data, Signs of Progress on Fiscal Cliff

Date : 11/19/2012 @ 9:53PM
Source : Dow Jones News

U.S. Stocks Jump After Housing Data, Signs of Progress on Fiscal Cliff

   By Chris Dieterich and Patrick McGee 
 

NEW YORK--The Dow Jones Industrial Average staged a triple-digit advance after a pair of strong readings from the housing market and as investors watched lawmakers for signs of a deal on the fiscal cliff.

The Dow climbed 146 points, or 1.2%, to 12734 in Monday-morning trading. On Friday, the Dow rose 46 points to snap a four-session losing streak, although the blue-chip benchmark has lost ground for four-straight weeks.

The Standard & Poor's 500-stock index gained 20 points, or 1.4%, to 1379 and the Nasdaq Composite Index jumped 40 points, or 1.4%, to 2893.

Investors said that the market remains tethered to news reports about potential progress on resolving the combination of tax increases and spending cuts set to go into effect at the end of the year.

President Barack Obama, in Bangkok for a three-nation trip on Sunday, said he was "confident" the fiscal situation could be dealt with by lawmakers.

"Constructive comments over the weekend are key for the market to feel like, in this postelection environment with all the intense partisan politics, the two parties will be able to get together on this issue," said Jeff Morris, head of U.S. equities at Standard Life Investments at Boston.

"After earnings season, it does seem that the market will be dictated by [fiscal cliff issues] between now and the end of the year," Mr. Morris said.

In U.S. economic news, sales of previously-owned homes grew last month, beating expectations. Separately, the National Association of Home Builders said Monday that its home builders' confidence index rose to its highest level in six-and-a-half years.

European markets rallied on speculation of U.S. fiscal progress, with the Stoxx Europe 600 climbing 1.8%. The boost in confidence comes a day ahead of a euro-zone finance ministers gathering to discuss Greece.

Asian markets were solidly higher, led by a 1.4% gain in Japan's Nikkei Stock Average. The index has climbed for four straight trading days. China's Shanghai Composite rose 0.1%.

Front-month crude-oil futures rose 2.2% to $88.84 a barrel, while November gold futures moved 0.9% higher to $1730 a troy ounce. The dollar weakened against the euro and the yen. Yields on benchmark 10-year Treasury bonds fell to 1.621%.

In corporate news, Intel rose 0.4% after Chief Executive Paul Otellini disclosed plans to retire in May after nearly 40 years with the chip maker.

Lowe's shot up 6.4% after reporting third-quarter earnings that handily topped estimates.

Tyson Foods advanced 8.1% as meat processor's chicken business returned to profitability in its most recent quarter, offsetting weakness in its beef and pork segments.

Wright Medical Group fell 2.5% after agreeing to acquire fellow medical-device maker BioMimetic Therapeutics, which jumped 68%, for about $190 million in cash and stock. Orthopedic-medical-device maker Wright agreed to pay roughly $6.47 a share for BioMimetic, a 56% premium to BioMimetic's Friday close. Shares surged 80%.

Write Chris Dieterich at christopher.dieterich@dowjones.com and to Patrick McGee at patrick.mcgee@dowjones.com



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