New York – Stocks extended their gains Thursday with a moderate advance as investors weighed fresh economic data, including a sharp drop in new-home sales, for clues to whether more interest-rate cuts are in the offing.
The Commerce Department’s report that sales of new homes plunged 8.3 percent in August to the lowest level in seven years was the latest round of bad news for the housing sector, but its arrival didn’t spook investors. Instead, stocks built on the sizable gains logged Wednesday.
While concerns that housing-market ills could drag the broader economy into a recession have bubbled up in recent months, the Federal Reserve’s larger-than-expected interest-rate cut last week appears to have left investors hopeful that cheaper capital would help stave off a broad slowdown.
And with the final trading day of the quarter arriving today, some investors likely engaged in buying and selling designed to spruce up their portfolios.
“You have positioning for the family photo,” said Erik Davidson, senior director of investments at Wells Fargo Private Bank.
He noted that as investors go about the usual business of shoring up their positions for the end of the quarter, some have been surprised by the absence of further bad news about tightness in the credit markets or about investments soured by bad mortgages.
“It’s almost a return to normalcy. This is a bit of a relief rally, and the bad things that people are afraid of aren’t really happening,” he said of gains in recent sessions.
The Dow Jones industrial average rose 34.79, or 0.25 percent, to 13,912.94. The Dow now sits 87.47 points below its record close of 14,000.41 set July 19.
Broader indexes also advanced. The Standard & Poor’s 500 index rose 5.96, or 0.39 percent, to 1,531.38, and the technology-heavy Nasdaq composite index rose 10.56, or 0.39 percent, to 2,709.59.
The Russell 2000 index of smaller companies rose 4.89, or 0.60 percent, to 814.01.
Bond prices rose, pushing the yield on the benchmark 10-year Treasury down to 4.57 percent from 4.62 percent at Wednesday’s close. The dollar was mixed against other major currencies, while gold prices edged higher.
Crude-oil prices rose as a hurricane near Mexico raised concerns about possible disruptions to oil and gas production. A barrel of light, sweet crude jumped $2.58 to settle at $82.88 per barrel on the New York Mercantile Exchange.
