Stocks rise after strong housing data

By @ibtimes on

Stocks rose on Friday, after data showed new home sales unexpectedly rose in July and new orders for durable goods surged, reassuring investors about the economy's health, although credit concerns remained.

Investors had been nervously awaiting the data after the head of Countrywide Financial Corp, the biggest U.S. mortgage company, said on Thursday the persistent downturn in the U.S. housing market could lead to a recession.

The new home sales data showed the economy may not be quite as weak as expected. We had some quite strong numbers today, that's for sure, but we don't know if they'll last long enough to boost the markets, said David Sloan, economist at 4Cast Ltd in New York.

It's unexpectedly firm. So combined with durable goods data, this suggests that the economy was fairly sturdy heading into the market disruption in August, said Pierre Ellis, senior global economist at Decision Economics in New York.

The Dow Jones industrial average was up 19.84 points, or 0.15 percent, at 13,255.72. The Standard & Poor's 500 Index was up 1.51 points, or 0.10 percent, at 1,464.01. The Nasdaq Composite Index was down 0.28 points, or 0.01 percent, at 2,541.42.

Sales of new U.S. homes unexpectedly rose 2.8 percent to an 870,000 annual pace in July, reversing two months of declines, and inventories eased, a Commerce Department report showed. The Dow Jones home builder index eased 0.2 percent.

Earlier, a report showed new orders for long-lasting U.S.-made goods surged much more than expected in July, for their biggest gain since September.

Oil companies such as Exxon Mobil climbed with oil prices. Exxon Mobil was the biggest boost to the Dow and the S&P, with its shares rising 1.9 percent to $85.30. U.S. crude futures rose $1 to $70.83 per barrel.

Fears about wider fallout from U.S. subprime mortgage woes kept a lid on gains, however. Four of Asia's biggest banks, including the commercial but state-run Bank of China, revealed bigger-than-expected exposure to U.S. subprime loans.

Financial shares remained the biggest drag on the S&P and Dow. The S&P financial index was down 0.7 percent. Wachovia Corp shares were down 1.6 percent at $48.91.

Shares of Marvell Technology Group Ltd fell 11.2 percent to $15.85 after the chipmaker posted a quarterly net loss on Thursday, due in part to higher spending on research and development.

(Additional reporting by Richard Leong)

Join the Discussion