NEW YORK >> Investors set aside concerns about a plunge in housing construction today and propelled stocks sharply higher as they focused on a growing sense that the economic recovery is gathering momentum. The Dow Jones industrials rose nearly 150 points, while the Nasdaq composite index climbed more than 40. Stocks shrug off drop
in housing constructionBy Amy Baldwin
Associated PressWall Street was initially concerned that the drop in housing starts indicated that one of the economy's strongest sectors was beginning to falter. But the market recovered from early declines and more than made up for a previous two-day sell-off.
Analysts say Wall Street is somewhat immune to bad news right now because investors want to buy stocks during what has traditionally been the strongest time of year for the market.
"We are in the season when stocks do better. The November-December-January period is typically the one when people become more optimistic about the coming year and they become more aggressive in buying stocks," said Bill Barker, investment strategy consultant at RBC Dain Rauscher in Dallas.
Advancing issues outnumbered decliners 9 to 5 on the New York Stock Exchange. Trading volume was moderate.
The Dow closed up 148.23, or 1.8 percent, at 8,623.01. The gain allowed the Dow to more than wipe out its previous two-day loss of 104.31.
The broader market also advanced. The Nasdaq rose 44.84, or 3.3 percent, to 1,419.35. The Standard & Poor's 500 index gained 17.41, or 1.9 percent, to 914.15. The Russell 2000 index rose 9.02, or 2.4 percent, to 388.59.
The price of the Treasury's 10-year note was down 25/32 point this afternoon, while its yield rose to 4.07 percent from 3.99 percent yesterday. Two-year Treasury notes were down 5/32 point and yielded 1.95 percent, up from 1.87 percent yesterday.
"We are in a bit of a grace period right now. Clearly, the psychology of the marketplace is positive. And, people are concerned abut getting left behind right now," said Brian Bush, director of equity research at Stephens Inc.
The Commerce Department reported that new housing construction fell by 11.4 percent in October, the biggest drop since 1994 and weaker than analysts expected.
The report followed a profit warning yesterday from Home Depot. The two developments raised questions about housing and consumer spending, which have been the two brighter spots in the economy during the bear market.
But the concerns weren't enough to derail Wall Street's upward momentum, which analysts attributed to better-than-expected third-quarter earnings and the growing belief that earnings and the economy will be stronger in 2003.
Overseas, Japan's Nikkei stock average finished up 1.1 percent. In Europe, France's CAC-40 fell 0.8 percent, Britain's FTSE 100 was essentially flat with a loss of 0.04 percent, and Germany's DAX index gained 0.2 percent.
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