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- Former Cape cop indicted on possessing child porn (2/17/17)
- Man dies after being shot by officer; said to have come at cop with knife (2/16/17)29
- Ray's of Kelso to close, then reopen under new ownership (2/16/17)6
Dow rises by triple digits for third straight session
NEW YORK -- The Dow Jones industrial average gained more than 100 points for the third straight day Monday after traders got some unexpected good news about the economy.
A report on the housing market came in better than traders anticipated. And shipping giant FedEx Corp. released a forecast that was more upbeat than the prediction it made just six weeks ago.
The news pulled stocks out of a slow start and sent the Dow up 100 points by the close for a three-day gain of 405. Traders who a week ago were selling on a pessimistic view of companies' earnings and the economy are now buying on the belief that the economic recovery, while slow, is proceeding.
The Dow has now closed higher in 12 of 17 trading days this month. Its latest advance means the average is up 7.7 percent in July after falling 10 percent from April through June on a stream of bad economic news. The Dow is also up 0.9 percent for the year. The broader Standard & Poor's 500 index is still showing a loss for 2010, but barely. It's down less than 0.01 percent.
Trading volume was light Monday, a sign that traders might be a little cautious despite the gains. Many are likely waiting for hundreds of earnings reports to be released this week before they make any major investing decisions.
But FedEx gave traders reason to buy when it said its overnight and ground delivery businesses are doing better than expected, and that it expects a moderate global economic recovery. That was heartening news because the shipping giant, which carries packages for businesses and consumers, is considered a barometer for how the economy is doing.
The shipping company raised its earnings forecast for the three months that will end Aug. 31. It said it expects to earn between $1.05 and $1.25 per share, up from its previous estimate of 85 cents to $1.05 per share.
Six weeks ago, traders were disappointed by FedEx's forecast.
"FedEx tells you a lot about overall manufacturing in the country," said Russ Koesterich a managing director at the money manager BlackRock Inc. "The positive release tells investors the recovery is bumpy but is still on pace."
Shortly after trading began, the Commerce Department said new home sales rebounded from a record low in May to an annual rate of 330,000 units, more than economists expected. The gain came after sales hit a record low annual rate of 267,000 in May. The report showed that the housing market might be weathering the severe slump that began with the expiration of a homebuyer's tax credit at the end of April.
Sales are still down 72 percent from their peak annual rate of 1.39 million in July 2005. Last year, sales plunged to a rate of 375,000 last year. So June's number was still weak, but traders were relieved that it wasn't worse.
"It tells investors that the housing market is not melting down again," Koesterich said. "One of the big fears is that as government stimulus is taken away there is going to be another housing meltdown -- that doesn't appear to the case."
Homebuilders stocks rose on the news. D.R. Horton Inc., Lennar Corp. and Toll Bros. Inc. rose more than 2 percent after the report.
The Dow rose 100.81, or 1 percent, to 10,525.43. Only one of the Dow's 30 stocks fell. Wal-Mart Stores Inc. fell 54 cents, or 1 percent, to $51.13.
The S&P 500 index rose 12.35, or 1.1 percent, to 1,115.01. Analysts said stocks were helped Monday by the fact that S&P 500 stayed above 1,100, an important psychological level. When the index didn't give back its gains, more investors were encouraged to buy.
The Nasdaq composite index rose 26.96, or 1.2 percent, to 2,296.43.
About four stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 4.1 billion shares, down from Friday's 4.6 billion.
Bond prices were narrowly mixed. The yield on the 10-year note, which moves opposite its price, fell to 2.99 percent from 3 percent late Friday. That yield helps set interest rates on mortgages and other consumer loans.
Stocks have risen in recent days as more companies reported strong second-quarter earnings and revenue and raised their forecasts for the coming quarters.
"There's been too much negativism priced in and we're coming off that," said Brian Gendreau, market strategist at Financial Network Investment Corp. "Earnings reports are definitely helping."
D.R. Horton rose 32 cents, or 3 percent, to $11.17. Lennar rose 49 cents, or 3.3 percent, to $15.42, while Toll Bros. rose 42 cents, or 2.4 percent, to $17.82.
FedEx gained $4.43, or 5.6 percent, to $83.39. Rival shipper UPS Inc. rose $1.21, or 1.9 percent, to $64.88.
European markets rose slightly as traders had their first chance to react to a series of tests that assessed the health of the continent's big banks. Regulators said only seven of the 91 banks tested would struggle if the European economy and government debt problems worsened.
Britain's FTSE 100 rose 0.7 percent, Germany's DAX index rose 0.5 percent, and France's CAC-40 gained 0.8 percent. Japan's Nikkei stock average rose 0.8 percent.