Nike earnings combine with strong US home price report to help lift stock market higher
In this June 22, 2011 photo, trader Christopher Forbes, center, works on the floor of the New York Stock Exchange. World stock markets edged higher Tuesday, June 28, 2011, as investors welcomed signs that French banks could give Greece more breathing room on its debt, although worries about longer-term problems with the country's embattled economy still lingered. (AP Photo/Richard Drew) , On Tuesday June 28, 2011, 2:54 pm
NEW YORK (AP) -- Maybe the global economy isn't in such bad shape after all.After weeks of worries about the economy pulled stocks down, indexes have risen sharply for two days in a row.
The Dow Jones industrial average rose more than 120 points in midday trading Tuesday, thanks in part to signs that concerns of a global slowdown may be overblown. Quarterly results from Nike Inc. bested analysts' expectations helped spark a rally in stocks of clothing stores, restaurants and jewelers. Such companies tend to do well when consumers are less worried about things like high gas prices and are willing to spend on themselves.
Other industries that do well during periods of economic expansion led the stock market higher. Caterpillar Inc., one of the 30 stocks that make up the Dow, gained the most, rising 2.3 percent. Industrials gained 1.2 percent overall. Consumer discretionary companies gained 1.6 percent.
Signs that the housing market is improving helped lift Home Depot Inc., a company that benefits when consumers spend money on home improvement. Home Depot gained 2.1 percent following a report that home prices rose in April in 13 of the 20 cities tracked by the Standard & Poor's/Case-Shiller index. The index rose for the first time in eight months thanks to an annual push to buy homes in the spring.
The long slump in the housing market has been a drag on the U.S. economic recovery. Housing usually leads the economy out of recessions. But that hasn't been the case with the current recovery, which began in June 2009.
A decline in U.S. consumer confidence to a seven-month low, largely because of worries about jobs, did not slow down the gains in stocks.
The Dow gained 121 points, or 1 percent, to 12.164 in afternoon trading. The Standard & Poor's 500 index rose 14, or 1.1 percent, to 1,294. The Nasdaq composite index added 34, or 1.3 percent, to 2,722.
Signs that the Greece may be making progress in its debt crisis also boosted markets. Greek lawmakers are debating austerity measures that must be passed to secure the next installment of emergency loans from international lenders. On Monday French banks agreed to accept slower repayment on Greek debts, another key step in avoiding a Greek debt default.
Among U.S. companies, Accenture rose 3.5 percent after S&P announced that the company would be added to its S&P 500 index. And tobacco company Altria Group fell 2 percent after the Food and Drug Administration announced it is reviewing research to determine the public health impact of menthol cigarettes.
Government bond prices fell as investors put a greater value on riskier assets like stocks. The yield on the benchmark 10-year Treasury rose to 3.03 percent from 2.93 percent Monday. Bond yields rise when prices fall. Bond yields fell to their lowest level of the year last week due to concerns that Greece's debt problems would spread to other European countries.
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