Housing moves the market - up

NEW YORK - The Standard & Poor's 500 index is up for the year. And for once, it was the housing market that sent stocks soaring.

The S&P 500, considered Wall Street's most important indicator, bounded up 3.39 percent yesterday and erased the last of its losses for 2009. The Dow Jones industrials shot up more than 200 points, the first finish above 8,400 since Jan. 13.

Yesterday's rally was led by the same financial and housing stocks that were decimated by the credit crisis and the sinking economy, and it added more momentum to a stunning rally that began March 10.

A double dose of good housing news ignited the advance: Pending U.S. home sales rose more than forecast and had their second straight monthly gain, while construction spending rose unexpectedly in March after five straight declines.

Investors are betting that a stream of slowly improving data since early March means that the economy, and Wall Street itself, has found a bottom. As they have kept buying, they have also overlooked reports, including millions of lost jobs, that point to continuing economic weakness.

The S&P 500 index rose 29.72 yesterday to 907.24, its first close above 900 since Jan. 8. It had shown a gain for the year only during the first five trading days of January, before the market began a huge drop that carried the S&P 500 and the Dow to their lowest levels since 1997.

The Dow rose 214.33, or 2.61 percent, to 8,426.74.

The Nasdaq composite index rose 44.36, or 2.58 percent, to 1,753.56. The Nasdaq, with a big representation of high-tech and smaller-company stocks, has run ahead of the other indexes, and is up 11.8 percent in 2009.

The pending-home-sales data touched off a rally in stocks of home builders. KBR Inc. rose $1.25, or 7.86 percent, to $17.15, while Lennar Corp. rose 88 cents, or 9.30 percent, to $10.34.

The market's enthusiasm will be put to several tests this week, including the April employment report, one of the most closely watched economic indicators, which comes out Friday.

Another concern for the market is the release Thursday of the results of the government's "stress tests" on the 19 largest U.S. financial companies.

The Financial Times reported Sunday that Citigroup Inc. and Bank of America Corp. are working on plans to raise more than $10 billion each as they negotiate with regulators over the findings of the stress tests.

Citigroup declined to comment, and a Bank of America spokesman called the report "completely inaccurate." Citi rose 23 cents, or 7.74 percent, to $3.20, while Bank of America jumped $1.68, or 19.31 percent, to $10.38.

Investors shrugged off word that regulators told Wells Fargo & Co. to shore up its finances after the "stress tests" showed the bank would have trouble surviving a deeper recession.

Wells Fargo rose $4.64, or 23.66 percent, to $24.25.

In other trading, the Russell 2000 index of smaller companies rose 19.84, or 4.07 percent, to 506.82.

Light, sweet crude rose $1.27 to settle at $54.47 on the New York Mercantile Exchange.

Overseas, Germany's DAX rose 2.8 percent and France's CAC-40 gained 2.5 percent. Markets in Japan and London were closed for holidays.