Successful Rise of Housing Market, Finally!

By TIM PARADIS and SARA LEPRO, AP Business Writers Tim Paradis And Sara Lepro, Ap Business Writers - 53 mins ago

NEW YORK - The Dow Jones industrials are back above 9,000 for the first time since the beginning of January.

Investors snapped up stocks across the market Thursday, sending major indexes up more than 2 percent, after a report showed existing home sales jumped for the third straight month in June.

The 3.6-percent increase in home sales has investors excited that the hard-hit housing market might be improving. The National Association of Realtors said sales came in at 4.89 million, above the 4.84 million analysts had been expecting.

Several better-than-expected earnings reports also helped boost investor sentiment. Ford Motor Co. surprised the market with a second-quarter profit of $2.3 billion due mainly to a huge gain for debt reduction, while drug maker Wyeth, cigarette maker Philip Morris International Inc. and candy maker Hershey Co. raised their profit forecasts for the year.

Outlooks are especially important, said John Merrill, chief investment officer of Tanglewood Wealth Management in Houston. Merrill said companies have done well to cut costs during the recession to help profits, but now investors will be focusing on revenue growth as a driver of earnings.

"If the outlook is at all positive, it means revenue will increase," Merrill said. With costs already trimmed, revenue will quickly boost profits, he said. It would also indicate economic activity is picking back up.

Investors were able to look past a government report showing a bigger-than-expected rise in new jobless claims. The Labor Department said the number of new claims for unemployment benefits rose by 30,000 last week to 554,000, slightly above analysts' estimates. However, a Labor Department analyst said the report was distorted by the timing of auto plant shutdowns.

Also, total unemployment benefit rolls fell to the lowest level since mid-April.

After a month of wayward trading, stocks restarted the market's spring rally early last week after companies like Goldman Sachs Group Inc. and Intel Corp. got earnings season off to a good start with solid reports.

"Things are getting much better and the market is pricing it in," said Phil Orlando, chief equity market strategist at Federated Investors.

In early afternoon trading, the Dow rose 190.60, or 2.2 percent, to 9,071.86. The blue chips last traded and closed above 9,000 on Jan. 6.

The Standard & Poor's 500 index rose 23.13, or 2.4 percent, to 977.20, while the Nasdaq composite index rose 47.04, or 2.4 percent, to 1,973.42.

Advancing issues outnumbered decliners by about 7 to 1 on the New York Stock Exchange, where volume came to 594.6 million shares, compared to 497.5 million traded at the same point Wednesday.

A wave of merger-and-acquisition activity also supported stocks. Bristol-Myers Squibb Co. said it plans to acquire Medarex Inc. for about $2.1 billion, the latest in a string of acquisitions by the drug maker. Medarex surged $7.47, or 89 percent, to $15.87, while Bristol-Myers rose 50 cents, or 2.5 percent, to $20.79.

Meanwhile, Amazon.com Inc. agreed to buy Zappos.com Inc., a privately held online shoe store, in a deal worth about $850 million. Amazon rose $5.01, or 5.6 percent, to $93.80.

Ford's profit was a huge improvement over the record $8.7 billion loss the company reported the same quarter a year earlier. Without one-time gains, the car maker would have lost $424 million, or 21 cents per share. That is still smaller than the loss of 50 cents per share analysts had been expecting. Ford rose 69 cents, or 10.8 percent, to $7.07.

Wyeth posted a better-than-expected 13 percent jump in second-quarter profit, as cost cuts overshadowed lower sales. It rose 30 cents to $47.16.

Philip Morris said earnings fell 9 percent as the stronger dollar shrunk profit earned in other currencies. The stock jumped $2.74, or 6.2 percent, to $46.62.

And Hershey said its quarterly profit leapt 72 percent thanks to a price hike and a new advertising effort. The shares rose $2.36, or 6.1 percent, to $41.31.

AT&T Inc. and 3M Co. reported drops in earnings, but their results exceeded analysts' expectations. AT&T rose 21 cents to $26.11, and 3M rose $3.62, or 5.6 percent, to $68.29.

Bond prices fell, pushing their yields higher, as money flowed back into the stock market and out of safe-haven investments. The yield on the benchmark 10-year Treasury note, which is closely tied to home mortgage rates, rose to 3.66 percent from 3.55 percent late Wednesday.

The dollar mostly fell against other major currencies, while gold prices dipped.

Oil prices rose $1.77 to $67.17 a barrel on the New York Mercantile Exchange.

The Russell 2000 index of smaller companies gained 16.95, or 3.2 percent, to 545.65.

Overseas, Japan's Nikkei stock average closed up 0.7 percent. Britain's FTSE 100 rose 1.5 percent, while Germany's DAX index jumped 2.5 percent and France's CAC-40 rose 2.1 percent.