Stocks jumped on Wednesday as upbeat housing and durable goods data fueled hopes that the toll taken by the recession may be abating, lifting shares of big manufacturers, banks and home builders.
Home building shares rose more than 9 percent after new home sales unexpectedly rose at their fastest pace in 10 months in February. Companies such as Caterpillar and 3M
The optimistic interpretation would be that the economy may be at least bottoming out -- not expanding, but not getting much worse, said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto.
I don't think you could call (people) optimistic, but I think they're starting to question the dark clouds and extreme pessimism we had earlier in the month.
The Dow Jones industrial average <.DJI> rose 174.11 points, or 2.27 percent, to 7,834.08. The Standard & Poor's 500 Index <.SPX> gained 16.57 points, or 2.06 percent, to 822.69. The Nasdaq Composite Index <.IXIC> put on 31.41 points, or 2.07 percent, to 1,547.93.
The financial sector extended its recent rally, after faltering on Tuesday, to lead the S&P higher, with Bank of America
The Dow Jones home construction index <.DJUSHB> jumped more than 10 percent after the home sales data. The report showed sales rose 4.7 percent in February, while prices fell by a record margin from a year ago.
Shares of big manufacturers also gave a lift, including Caterpillar
Also on the data front, a report showed U.S. mortgage applications jumped last week as record low interest rates spurred a surge in demand to refinance home loans.
Stocks have rallied in recent weeks, including a big run-up on Monday, as policy makers unveiled moves aimed at shoring up the economy and some major banks said they were profitable in the early part of the year.
(Editing by James Dalgleish)