Stocks on Wall Street rallied on Tuesday after back-to-back losing sessions, boosted by some buoyant house price data and an indication that consumer confidence is bouncing back this month.
By Peter Martin
Tuesday, March 25, 2014
By late morning in New York, the Dow Jones Industrial Average was up 0.46% or 75 points at 16,351, while the broader-based S&P 500 index boasted gains that were not far behind, up 0.35% at 1863.9. There were two reports on house prices released on Tuesday morning, both suggesting that the value of homes continues to rise solidly. The Federal Housing Finance Agency (FHFA) house price index climbed 0.5% month-on-month in January, on a seasonally-adjusted basis, following on from a 0.7% increase in December. Year-on-year the change was 7.4%, compared to 7.5% in the month prior. The Case-Shiller home price index, meanwhile, which measures price changes of real estate in 20 major cities across the nation, showed a 0.8% month-on-month change in January, once again on a seasonally-adjusted basis. The annual change was 13.2%.
Rising house prices may be acting to constrain home sales though. New home sales data was also released on Tuesday and showed sales for February slowing to an annual pace of 440,000, bang in line with the consensus estimate but down from January’s rate of 455,000. January’s rate was surprisingly strong, however, and taking the last two months together, the strength of sales is reasonably encouraging.
The Conference Board’s widely-followed consumer confidence index jumped to 82.3 in March, up from February’s reading of 78.3, coming in significantly stronger than the 78.6 that had been forecast by a poll conducted by Reuters. Much of the increase is concentrated in the expectations sub-components for business conditions and future employment, more than offsetting a slight decline in the current conditions component of the index. Conventional wisdom contends that if consumers are feeling optimistic about the outlook for the economy, they are more inclined to spend, which is significant as consumer spending constitutes a majority of US GDP.
Though the stock market has rallied today, there are still signs of money flowing into assets that are viewed as safe havens, as the G7 countries threaten further sanctions against Russia over its annexation of Crimea. Spot gold climbed 0.3% to $1312.3 per troy ounce, while silver advanced 0.54% to $20.03 per troy ounce. The rise in these dollar-denominated metals came despite the US dollar strengthening today.
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