Investors returned to Wall Street Wednesday after getting fresh signs that their doomsday forecast for the economy might have been overdone.
Stocks rose about 2 percent, including the Dow Jones industrial average, which jumped 170 points.
The government reported that February brought increases in demand for big-ticket manufactured goods and higher sales of new homes. Both readings came in better than expected.
Data on durable goods orders can be fickle, and February home sales were still the second-worst on record. But many traders are relieved simply to see even modest signs that the economy is halting its slide.
Economists’ expectations have been so grim lately that surprising reports on retail sales, housing starts and inflation have helped propel a two-week rally in stocks after the numbers weren’t as bad as feared. The numbers Wednesday extended that run.
“In every other environment this would be OK news but given the enormous level of pessimism, the hurdle is as low as a limbo stick,” said Jack A. Ablin, chief investment officer at Harris Private Bank in Chicago. “Relative to expectations, this is fantastic news.”
In midday trading, the Dow rose 173.31, or 2.3 percent, to 7,833.28. The Dow fell nearly 116 points on Tuesday and surged almost 500 on Monday.
Broader stock indicators also rose. The Standard & Poor’s 500 index rose 17.00, or 2.1 percent, to 823.25, and the Nasdaq composite index rose 29.52, or 2 percent, to 1,546.04.
The Russell 2000 index of smaller companies rose 14.26, or 3.4 percent, to 431.04.
More than six stocks rose for every one that fell on the New York Stock Exchange, where volume came to 600.5 million shares.
Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.73 percent from 2.71 percent late Tuesday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.19 percent from 0.17 percent Tuesday.
The dollar was mixed against other major currencies, while gold prices fell.
Oil fell 38 cents to $53.60 a barrel on the New York Mercantile Exchange.
Orders at U.S. factories for cars, airplanes, household appliances, furniture and other large goods rose 3.4 percent last month, far better than analysts’ forecast of a decline of 2 percent. The increase was the biggest in 14 months and breaks a streak of six straight monthly drops. However, a large drop in orders in January was revised even lower.
New home sales rose 4.7 percent in February to a seasonally adjusted annual rate of 337,000. The month was still the worst on records dating to 1963. Economists surveyed by Thomson Reuters had expected February sales to fall to a pace of 300,000 units.
Copyright 2009 The Associated Press.
