News Column

Stocks Rise on U.S. Home Construction Rebound

August 19, 2014

Joe McDonald, AP Business Writer

Traders on the floor of the New York Stock Exchange (AP)
Traders on the floor of the New York Stock Exchange (AP)

NEW YORK (AP) Encouraging economic news helped push the stock market higher on Tuesday. Home construction rebounded in July, while inflation remained muted.

Aeropostale, a teen-clothing company, surged after reinstating its former CEO. Home Depot climbed after raising its annual profit guidance following a strong spring selling season.

KEEPING SCORE: The Standard & Poor's 500 index rose seven points, or 0.4 percent, to 1,979 points, as of 11:21 a.m. Eastern. The Dow Jones industrial average climbed 71 points, or 0.4 percent, to 16,910. The Nasdaq composite gained eight points, or 0.2 percent to 4,517.

COMING BACK: The stock market is getting off to a strong start to the week, and appears to have put a summer swoon behind it. The S&P 500 fell to its lowest level since May earlier in the month amid concerns about escalating geopolitical tensions. Now the index has rebounded and is less than 1 percent below its record close of 1,987.98 set on July 24.

Stocks have "clawed back, and it shows the resilience of the market," said James Liu, Global Market Strategist at J.P. Morgan Funds. "I still really like the market for the rest of this year."

TO THE MAXX: TJX, the parent company of T.J. Maxx, Marshalls and other stores, gained $4.08, or 7.5 percent, to $57.95. The company's quarterly income climbed 8 percent as sales strengthened in the U.S. and abroad. The results beat the estimates of Wall Street analysts. TJX also lifted its full-year earnings forecast.

HOME HELP: A survey showed sentiment among U.S. home builders improved in August for a third month. Applications for building permits, considered a good sign of future activity, were also strong in July. Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy, generating tax revenue and creating jobs.

HOME HELP: Home Depot jumped $4.50, or 5.4 percent, to $88.06 after the company said its quarterly income surged 14 percent. Spring is the biggest season for home-improvement retailers, as homeowners work on their yards and gardens. Home Depot has also been helped by an improving housing market.

CEO COMEBACK: Aeropostale jumped 37 cents, or 11.7 percent, to $3.61. The company is bringing back its former CEO after struggling with sliding sales. The New York company said Julian Geiger is taking over effective immediately. Thomas Johnson is leaving the board of directors as well as relinquishing the CEO title.

CONSUMER PRICES: Inflation remains subdued. U.S. consumer prices rose in July at the slowest pace in five months, held back by a drop in gasoline prices. Consumer prices edged up 0.1 percent last month, after larger gains of 0.3 percent in June and 0.4 percent in May. If inflation remains constrained, investors judge that the Federal Reserve will be able keep its key interest rate low for longer.

EUROPEAN MARKETS: Germany's DAX rose 1 percent to 9,339 and France's CAC-40 gained 0.7 percent to 4,258. London's FTSE 100 edged up 0.6 percent to 6,779.

CURRENCIES: The dollar rose 0.2 percent to 102.85 yen, while the euro fell 0.1 percent to $1.3320. The pound was the biggest mover, slumping 0.5 percent against the dollar to $1.6644, after weak British inflation figures reduced the likelihood of interest rates increases in coming months.

BONDS AND COMMODITIES: Benchmark U.S. crude fell 25 cents to $93.50 in New York. Bond prices didn't move much. The yield on the 10-year Treasury note fell held at 2.40 percent.

AP Business Writer Joe McDonald contributed from Beijing.

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Original headline: Stocks rise as US home construction rebounds


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