Stocks rose on Tuesday, briefly lifting the S&P 500 to a 14-month high, as a surge in existing home sales indicated more stabilization in housing, increasing optimism about the economic recovery and prospects for profits.
Stocks supporting the market's advance included big manufacturers like Boeing Co
Technology bellwethers also underpinned the market, with International Business Machines Corp
The Dow Jones U.S. home construction index <.DJUSHB> jumped 4 percent following a report that showed U.S. existing home sales rose 7.4 percent in November to an annual rate of 6.54 million units, which was the fastest pace since February 2007. The November reading was much stronger than expected.
Investors are warming up to the fact that the economic expansion is here, and is likely to expand sufficiently to suit corporate profits in 2010, said Bruce Zaro, chief technical strategist at Delta Global Advisors in Boston.
Any sign of stabilization in housing lends a big boost to investor sentiment as it was the fallout from that sector's downturn that recently drove the economy into its worst recession since the 1930s and propelled the U.S. unemployment rate above 10 percent to a 26-year high.
The Dow Jones industrial average <.DJI> gained 48.37 points, or 0.46 percent, to 10,462.51. The Standard & Poor's 500 Index <.SPX>advance 4.15 points, or 0.37 percent, to 1,118.20. The Nasdaq Composite Index <.IXIC> rose 13.51 points, or 0.60 percent, to 2,251.17.
Earlier in the session, the S&P 500 <.SPX> hit a technical milestone, surging to an intraday high of 1,120.27 -- its highest in 14 months.
Market technicians have said a breakout in the S&P 500 above the 1,120 level would signal more gains for the broader market and could help the S&P 500 take aim at the 1,200 level.
The S&P 500 has risen 65 percent since hitting a 12-year closing low on March 9 and is up 23.9 percent for the year.
Year-end window dressing -- where portfolio managers sell laggards and buy shares that have rallied recently -- also boosted stocks.
The CBOE Volatility Index <.VIX> or VIX, Wall Street's favorite barometer of investor fear, fell below a key psychological level of 20 to its lowest level since August 2008. In afternoon trading, the Vix was down 4.4 percent at $19.58.
A separate economic report that gave the final estimate of gross domestic product showed that GDP grew at an annual rate of 2.2 percent in the third quarter -- below the forecast for a gain of 2.8 percent.
(Reporting by Leah Schnurr; Editing by Jan Paschal)