NEW YORK — Investors restarted Wall Street’s rally Tuesday, buying financial and homebuilder stocks after a surprisingly upbeat report on home construction.
Major market indicators jumped more than 2 percent, including the Dow Jones industrial average, which added 179 points. The technology-heavy Nasdaq surged more than 4 percent after sliding Monday. Stocks have risen in five of the past six sessions.
The government’s report that housing starts rose unexpectedly in February more than offset news that Alcoa is slashing its dividend.
The upbeat construction report provided the latest glimmer of hope for Wall Street and revived interest in the long-suffering housing industry. Stocks began rallying a week ago after Citigroup said it operated at a profit in the first two months of the year.
Similarly upbeat assessments from other troubled banks and better-than-expected readings on retail sales have led some investors to believe the market has been too pessimistic about the economy.
Stocks surged last week in a four-session rally that left market barometers up about 10 percent — the type of gains they might normally take a year to assemble. Buyers stepped in again Tuesday after stocks posted moderate declines Monday.
Brett D’Arcy, chief investment officer at CBIZ Wealth Management, said relatively quiet trading the past two days is “a great sign” because it means investors are holding on to gains from week and aren’t trying to grab quick profits. He said that indicates a base could be forming in the market. Last week, the Dow jumped 379 points in one session.
The Dow rose 178.73, or 2.5 percent, to 7,395.70. Broader stock indicators also advanced. The Standard & Poor’s 500 rose 24.23, or 3.2 percent, to 778.12, while the Nasdaq composite rose 58.09, or 4.1 percent, to 1,462.11.
The market has established a clear shift in tone over the past week. Jittery traders had blown apart earlier rallies this year by selling just as stocks managed to advance. A 20 percent run-up from late November until the start of the year fizzled as worries grew about the tattered balance sheets at large banks and signs that consumers were pulling back on their spending.
Tim Courtney, chief investment officer at Burns Advisory Group, said the home-construction report was encouraging and could be part of an initial recovery in the housing market.
“We could be in the very early stages of some kind of normalization” in housing, he said.
