Reports this week on durable goods and new home sales added to growing economic news that demand is better than expected, pushing all thirty components of the Dow Jones Industrial Average into gains. Bank of America was the DJIA’s leader gaining ten percent. GE rose over six percent and CAT climbed a healthy four percent.
Other major indexes posted across the board gains, with the S&P 500 index and Nasdaq Composite index tying with a two and half percent overall advance. Data made available Wednesday on the housing market hinted at a cessation of sorts of the recession. New house sales rose for the first time since July 2008, and pushed up home builder stocks like Toll Brothers (TOL), six and a half percent, and D.R. Horton (DHI), fourteen percent.
Economists warn that some data may still suggest a weakness in the crippled economy, despite reports from the Commerce Department that orders for durable goods rose almost 3.5 percent in February. The capital goods sector for non-defense, generally deemed a loose indicator of business spending, was up six and half percent, after stumbling to an eleven percent loss in January. Experts caution that this sudden burst of growth can not be sustained and that the underlying structure of the economy is still deteriorating.
Reasons for caution include the falling Treasury bills, falling crude oil prices despite inventory data, and the weak dollar against all world currencies. Experts fear the new housing data could be skewed due to buyers taking advantage of the bursting foreclosure market, and homeowners taking advantage of lower interest rates for refinancing loans with much higher mortgage rates, or worse adjustable rates. The Marin real estate market is still off to a slow 2009, but it appears that home sales are beginning to jump a bit.
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