NEW YORK – Investors returned to Wall Street Wednesday after getting another sign that their doomsday forecast for the economy might have been overdone.
The government reported that demand for big-ticket manufactured goods rose in February rather than fell as economists had predicted. Data on durable goods orders can be fickle but the surprise increase is still welcome news for an economy that until weeks ago seemed only capable of producing worsening stats.
Orders at U.S. factories for cars, airplanes, household appliances, furniture and other large goods rose 3.4 percent last month, rather than fell 2 percent as forecast. The increase was the biggest in 14 months and breaks a streak of six straight monthly drops. However, a large drop in orders in January was revised even lower.
It will take months of improving data before analysts can safely assert that the economy is on the mend. But many traders are simply anxious for any signs that the economy is at least halting its slide.
Economists’ expectations have been so grim lately that recent reports on retail sales, housing starts and inflation have helped propel a two-week rally in stocks after the numbers weren’t as bad as feared.
The gains early Wednesday follow a drop in the market Tuesday and a huge rally Monday that came as the government outlined a plan to help banks dispose of bad assets.
Traders will be looking for any further signs that they might have been too pessimistic. The government is expected to release a report at 10 a.m. EDT showing that sales of new homes fell 2.9 percent last month to a record low. Wall Street expects new home sales fell in February to a seasonally adjusted annual rate of 300,000 units from 309,000 units a month earlier.
In the first hour of trading, the Dow Jones industrial average rose 94.46, or 1.2 percent, to 7,754.43. The Dow fell nearly 116 points on Tuesday.
Broader stock indicators also rose. The Standard & Poor’s 500 index rose 8.56, or 1.1 percent, to 814.81, and the Nasdaq composite index rose 17.48, or 1.2 percent, to 1,534.00.