Stocks hold gains despite sluggish housing databy Sara Lepro on Dec. 23, 2008, under Edge
NEW YORK – Investors were relieved Tuesday after a government report on the economy met expectations and eased their concerns that the recession is deepening.
The Commerce Department reported third-quarter gross domestic product, a measure of the economy that tallies the value of goods and services, fell at an annual rate of 0.5 percent. That was in line with analysts’ expectations and matched the government’s estimate of a month ago.
While the readings show further weakness, investors have likely already priced in very low expectations. The concern, however, is that the current quarter will be much worse.
The market was also able to get past a report that showed sales of new homes fell in November to the slowest pace in nearly 18 years, while new home prices dropped by the biggest amount in eight months.
New home sales fell by 2.9 percent to a seasonally adjusted annual sales pace of 407,000 units, a weaker performance than economists had expected and was the slowest sales pace since January 1991. The median price of a new home sold in November was $220,400, a drop of 11.5 percent from the sales price a year ago.
Trading volume was light, and is expected to remain so the rest of this week as investors head into the holidays. Analysts are mindful that light volume tends to skew the market’s movements, and warned that this week may not suggest any long-term trends.
“Don’t read too much into the numbers until the end of the day, we’re really in a holding pattern right now,” said Ryan Larson, head of equity trading at Voyageur Asset Management. “It is a very quiet news week, and much of it has already been priced into the market.”
In late morning trading, the Dow Jones industrial average rose 20.87, or 0.24 percent, to 8,540.64.
Broader indexes were also higher. The Standard & Poor’s 500 index rose 2.95, or 0.34 percent, to 874.58. The Nasdaq composite index added 6.58, or 0.43 percent, to 1,538.93. The Russell 2000 index of smaller companies fell 0.96, or 0.20 percent, to 474.11.
Advancing issues led decliners by 4 to 3 on the New York Stock Exchange, where volume came to 245 million shares.
Bond prices were little changed Tuesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.15 percent from 2.17 percent late Monday. The yield on the three-month T-bill, considered one of the safest investments, was unchanged at 0.02 percent from late Monday.
In corporate news, greeting-card company American Greetings Corp. said it swung to a third-quarter loss, hurt by hefty charges and a decline in sales. Shares fell $3.00, or 30 percent, to $6.82.
Commercial financial firm CIT Group Inc. said Tuesday it received preliminary approval to obtain $2.33 billion as part of the government’s $700 billion bank investment program.
The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude fell 76 cents to $39.10 a barrel on the New York Mercantile Exchange.
Overseas, Japan’s Nikkei stock average rose 1.57 percent. Hong Kong’s Hang Seng index fell 2.75 percent. In afternoon trading, Britain’s FTSE 100 was up 1.05 percent, Germany’s DAX index was up 1.11 percent, and France’s CAC-40 was up 0.48 percent.