From The Associated Press
NEW YORK —
The stock market jumped Tuesday following a surge in U.S. home prices and new signs of strength in Europe’s economy.
The Dow Jones industrial average was up 104 points at 13,983 after the first hour of trading. The Standard & Poor’s 500 was up 11 at 1,507. The Nasdaq composite was up 16 to 3,147.
The rise follows two days of whiplash. On Friday, the Dow gained 149 points, rising above 14,000 for the first time since 2007. On Monday, it fell 129 points, its worst sell-off of the year so far.
Tuesday’s gain was driven by new data showing that U.S. home prices rose in December at the fastest pace in more than six years. CoreLogic, a real estate data provider, reported that home prices rose 8.3 percent.
In Europe, a measure of manufacturing and service businesses rose to a 10-month high January.
While the numbers suggest that the overall economy is still contracting, there is also evidence that a recovery may be taking root.
The market has risen more or less steadily in the new year. Lance Roberts, chief economist at Streettalk Advisors in Houston, Texas, said that’s related more to the Federal Reserve’s commitment to keep money cheap than to companies’ performance. If earnings are beating estimates, he said, it’s largely because expectations were so low.
“If you lower the hurdles enough, companies can get over them,” Roberts said.
The fact that small, individual investors are starting to return to stocks, as they have in recent weeks, is another sign that the market is due for a correction, Roberts and other analysts have said.
McGraw-Hill Cos., parent of the Standard & Poor’s ratings agency, fell more than 4 percent, down $2.40 to $47.90, after the federal government sued S&P. The government said that S&P knowingly misled investors about the quality of the mortgage-backed securities it was rating. That followed a 14 percent decline at McGraw-Hill on Monday, after reports about the lawsuit first leaked.
Yum Brands, parent of KFC, Pizza Hut and Taco Bell, fell nearly 6 percent, down $3.66 to $60.28. The company warned late Monday that 2013 profits could decline as it continues to reel from a controversy over its chicken suppliers in China.
Dell, the struggling computer giant, rose 12 cents to $13.39 after the company announced a $24.4 billion buyout deal led by founder Michael Dell that will take the company private at $13.65 a share.
Cereal maker Kellogg was up nearly 2 percent, jumping $1.05 to $59.15, after reporting fourth-quarter results. It reported a fourth-quarter loss on a pension-related charge, but its underlying earnings rose, helped partly by its recent purchase of Pringles chips.
Zynga, the maker of online games like FarmVille, jumped more than 7percent, up 20 cents to $2.76. The company will report quarterly earnings this afternoon.