Stocks pushed higher for a third day after a report that home sales were surprisingly strong last month.
Stocks pushed higher for a third day after a report that home sales were surprisingly strong last month.
The National Association of Realtors said Tuesday that home resales jumped 7.4 percent in November, much more than the 2.5 percent increase expected. Sales were 44 percent above last year's levels and at their highest level in nearly three years. The improvement is due to an extraordinary amount of federal support that encouraged homebuyers to take advantage of big tax breaks.
The report offered the latest evidence that the economic recovery is picking up pace.
Stocks had been rising modestly prior to the report after the Commerce Department's new reading on gross domestic product showed a growth rate of 2.2 percent in the third quarter. While that was lower than a previous estimate of 2.8 percent, the economy still grew during the period after a record four straight quarters of decline.
Analysts said investors were able to shrug off the revision to the GDP number because they are focusing instead on fourth quarter growth. With economic data continuing to show improvement, many analysts believe the economy is on track for a better finish in the current quarter.
"My guess is people want to stay invested and be optimistic going in to the release of the fourth-quarter numbers in mid-January," said Nick Kalivas, vice president of financial research at MF Global.
In late morning trading, the Dow Jones industrial average rose 36.73, or 0.4 percent, to 10,450.87. The Standard & Poor's 500 index rose 2.08, or 0.2 percent, to 1,116.13, while the Nasdaq composite index rose 8.82, or 0.4 percent, to 2,246.48.
About four stocks rose for every three that fell on the New York Stock Exchange, where volume was low at 247.2 million shares, compared with 291.5 million at the same time on Monday.
Trading is expected to be light throughout the holiday-shortened week, which can exaggerate price swings. The market is open a half day on Thursday and closed Friday for Christmas.
Stocks moved sharply higher on Monday as a wave of acquisitions and a push toward health care overhaul on Capitol Hill stoked investors' confidence in the economy. Major indexes rose about 1 percent.
Corporate deals continued Tuesday, as Boston-based State Street Corp. agreed to buy the securities services business of Italian banking group Intesa Sanpaolo for $1.87 billion.
Bond prices fell further as optimism over the recovery grew. Investors typically sell long-term bonds during a rebound because of fears inflation will increase during that time. Inflation is bad for bonds because it eats into their fixed returns.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, hovered at levels not seen since August, rising to 3.75 percent from 3.68 percent late Monday.
The yield on the three-month T-bill rose to 0.08 percent from 0.05 percent. Short-term rates remain low because they are closely tied to interest rates set by the Federal Reserve. The Fed has said it has no plans to alter rates in the coming months. The growing gap between short- and long-term bonds provides further evidence investors are becoming more confident in the economy's strength.
The dollar moved higher against other major currencies making commodities more expensive to foreign buyers. Gold prices fell to their lowest level since early November and oil prices lost 97 cents to $72.75 a barrel on the New York Mercantile Exchange.
In other trading, the Russell 2000 index of smaller companies rose 2.75, or 0.4 percent, to 621.35.
Overseas, Japan's Nikkei stock average jumped 1.9 percent. In afternoon trading, Britain's FTSE 100 rose 1.1 percent, Germany's DAX index gained 0.6 percent, and France's CAC-40 rose 0.8 percent.
