Posted on: Tuesday, April 26, 2005
Investor confidence boosted by home sales
By Michael J. Martinez
Associated Press
NEW YORK — Stocks made a strong move higher yesterday as a new spate of merger activity and a surprising rise in home sales restored investors' confidence in the economy and eased fears of inflation and higher interest rates.
A climb in home sales also lifted investors' spirits, with the unexpected jump illustrating that the higher interest rates by the Federal Reserve — designed to keep inflation in check — were not hurting on home purchases. The National Association of Realtors said home sales rose to an annualized rate of 6.89 million in March, up from 6.7 million in February.
"The housing sales report was big because there were a number of signs that the economy might be weakening, and this disputes that," said Ken Tower, chief market strategist for Schwab's CyberTrader. "There's still a lot of work to do to really move the market forward, but this is a good start."
The bond market was little changed after last week's gains, with yield on the 10-year Treasury note holding steady at 4.25 percent from late Friday. The dollar rose against most major currencies, while gold prices fell.
Analysts noted that volume was relatively low compared with the last few weeks of heavy trading, and said some investors might prefer to sit out of the market until next week, when the Fed's next decision on interest rates is due.
The news of Valero Energy Corp.'s $6.9 billion takeover of oil refiner Premcor Inc. — creating the largest oil refiner in North America — reassured investors that corporate America was still willing to make large deals despite economic uncertainty.
