Stock market resumes rally after upbeat housing report

NEW YORK (AP) — 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 five out of the past six sessions.

The government’s report that housing starts rose unexpectedly in February more than offset news that Alcoa Inc. is slashing its dividend.

The Commerce Department reported Tuesday that construction of new homes and apartments jumped 22.2 percent in February compared with January, pushing total activity to a seasonally adjusted annual rate of 583,000 units.

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 Inc. 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 last week and aren’t trying to grab quick profits.

He said that indicates a base could be forming in the market. Four stocks rose for every one that fell on the New York Stock Exchange, where volume came to a light 1.49 billion shares. Light volume indicates less conviction behind the market’s moves.

D’Arcy said technology companies got an extra boost as investors moved back into those stocks after they fell sharply Monday.

The market has established a clear shift in tone over the past week.