Wall Street advanced as the latest US housing numbers confirmed expectations that the industry will sustain its recovery, underpinning optimism for the overall strength of the American economy.
Residential real estate prices in 20 cities climbed 8.1 percent in January from the same time last year, posting the largest 12-month increase since June 2006, according to S&P/Case-Shiller data.
And while a Commerce Department report showed that new home sales dropped 4.6 percent to a 411,000 annualised pace in February, after a 431,000 rate in January, it was the best two-month performance since August and September 2008 and a 12 percent gain from the same month last year.
Also good news was the 5.7 percent jump in durable goods orders last month, shown in a separate Commerce Department report. The gain surpassed economists’ expectations.
“The data continues to be pretty good out of the US and that’s part of the reason stocks are still up here at 1,550, even though we had some bad news out of Europe over the past few days,” Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, told Bloomberg. “Housing is a huge part of the economic recovery story and if housing prices rise, people feel better about their homes and generally more confident.”
Even so, the Conference Board’s consumer confidence index dropped to 59.7 in March from a revised three-month high of 68 in February.
“We expect consumer confidence to gain ground as the shock value of the sequester disappears,” Chris Christopher an economist at IHS Global Insight in Lexington Massachusetts, told Reuters, referring to the debate among US lawmakers about how to balance the budget.
In afternoon trading in New York, the Dow Jones Industrial Average rose 0.61 percent, while the Standard & Poor’s 500 Index gained 0.47 percent, and the Nasdaq Composite Index increased 0.31 percent.
Shares of Netflix climbed, last up 5.9 percent to US$191.49, after Pacific Crest lifted its price target on the stock to US$225 from US$160.
In Europe, the Stoxx 600 Index finished the session with a 0.2 percent gain from the previous close. Benchmark stock indexes also rose in Frankfurt, London and Paris, closing with gains of 0.1 percent, 0.3 percent and 0.6 percent respectively.
While there is still plenty of cause for concern about potential risks that might derail the global economy, worst-case scenarios have certainly brightened for most investors.
Gold prices on average may fall this year for the first time since 2001 as investors shift “away from extreme expectations of an imminent collapse of the global financial system,” Jeffrey Christian, managing director of CPM Group, told Bloomberg News in an interview before the release today of the research company’s “Gold Yearbook 2013.”
The metal may average US$1,565 an ounce in 2013, down 6.2 percent from the spot average of US$1,668.75 in 2012.