Dow hits record high as surge in home prices lifts stocks

2013-03-27T00:00:00Z Dow hits record high as surge in home prices lifts stocksThe Associated Press The Associated Press
March 27, 2013 12:00 am  • 

NEW YORK - More good news on the economy Tuesday drove the Standard & Poor's 500 index to within two points of its record closing high.

The S&P rose 12.08 points, or 0.8 percent, to 1,563.77. Its record close of 1,565.16 was on Oct. 9, 2007, before the Great Recession and ensuing financial crisis battered markets.

Rising home prices and orders for manufactured goods drove all other major indexes higher as well. The Dow Jones industrial average rose 111.90 points, or 0.8 percent, to another record high - 14,559.65.

"Unless something major comes along to derail this rally, it just seems like the market is going to keep climbing higher," said Marty LeClerc, managing partner of Barrack Yard Advisors, an investment firm in Bryn Mawr, Pa.

Factory orders surged in February, helped by stronger demand for commercial aircraft. Overall orders for durable goods, a catchall term for products ranging from refrigerators to jumbo jets, jumped 5.7 percent from the previous month, the Commerce Department said Tuesday. It was the biggest increase in five months.

All 10 industry groups in the S&P 500 rose, led by health-care and energy companies. But smaller companies, which have been beating the market all year, didn't do as well Tuesday. The Nasdaq composite rose 17.18 points, or 0.5 percent, to 3,252.48, and the Russell 2000 rose 3.97 points, or 0.4 percent, to 949.82.

Big-company stocks and small-company stocks often part ways, said Jack Ablin, chief investment officer at BMO Private Bank in Chicago. Recently, Europe has been the reason. Big corporations generally do more business in Europe, and their stocks had wavered over the past week as traders watched negotiations to rescue Cyprus.

After a deal was announced Sunday, there was still uncertainty on Wall Street Monday. But by Tuesday, investors seemed back to focusing on the U.S. economy, and stocks of big companies rose the most.

By contrast, smaller companies are less exposed to the rest of the world.

Netflix surged 5 percent, leading the S&P 500, after an analyst at Pacific Crest Securities said the stock will likely climb as the company continues to add subscribers. Netflix's database of its members' viewing habits should give it an edge in creating shows and draw more people to sign up for its video-streaming service, the analyst said. Netflix rose $9.82 to $190.61.

Housing prices rose in January at the fastest pace since the summer of 2006. The Standard & Poor's/Case-Shiller index of prices in 20 cities (not including Tucson) was up 8.1 percent over January 2012. That compared with a 6.8 percent year-over-year increase in the index in December. Prices rose in all 20 cities, led by 23.2 percent in Phoenix.

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