Hopeful signs in housing lift stocks

NEW YORK - Signs of strength in the housing market pushed the Dow Jones industrial average to its second straight gain of more than 100 points.

An increase in the number of people with contracts to buy homes and the first profit at home builder D.R. Horton Inc. in three years raised hopes that one of the weakest parts of the economy is improving.

The Dow rose 111 points yesterday, boosting its two-day gain to nearly 230 points and extending a recovery from a slide in January. It was the biggest back-to-back advance for the Dow in three months.

The National Association of Realtors, a trade group, said its index of sales contracts rose 1 percent in December. It was the ninth improvement over the last 10 months as buyers scrambled to take advantage of a tax credit for first-time home buyers before it was set to expire in November.

"It's a slow, sustainable growth," said Daniel Penrod, senior industry analyst for the California Credit Union League. "Most people would prefer a quick rebound, but that's not likely to happen."

D.R. Horton posted its first earnings since 2007 during its fiscal first quarter.

The reports brought a positive tone to the market, which stumbled in the second half of January as concerns arose that the recovery might be stalling and that the market's 10-month advance was running out of gas. The Standard & Poor's 500 index fell 3.7 percent in January, its worst month since hitting a 12-year low nearly a year ago.

Yesterday, the Dow rose 111.32, or 1.09 percent, to 10,296.85.

The S&P 500 index rose 14.14, or 1.30 percent, to 1,103.32, while the Nasdaq composite index advanced 18.86, or 0.87 percent, to 2,190.06.

Bond prices rose, pushing yields lower.

Crude oil jumped $2.80 to close at $77.23 a barrel on the New York Mercantile Exchange, its biggest one-day gain in four months as stocks advanced and hopes grew that the economy is strengthening. The dollar fell against other major currencies, while gold rose.

Confidence also grew after Treasury Secretary Tim Geithner told the Senate Finance Committee that the economy was in better shape than a year ago but that the government still needed to bring down unemployment, which stands at 10 percent.

Among home builders, shares of D.R. Horton jumped $1.30, or 10.92 percent, to $13.21. Shares of Toll Bros. Inc., of Horsham, Pa., rose $1.04, or 5.59 percent, to $19.66, while Pulte Homes Inc. shares rose 79 cents, or 7.48 percent, to $11.35.

Lexmark International Inc. said lower costs helped increase its fourth-quarter earnings. Shares of the maker of printers and copiers rose $3.21, or 11.98 percent, to $30.01.

Shares of AnnTaylor Stores Corp. rose $2.36, or 17.63 percent, to $15.75 after saying its fourth-quarter earnings would top expectations on stronger sales and profit margins.

The Russell 2000 index of smaller companies rose 4.80, or 0.79 percent, to 614.05.

Britain's FTSE 100 rose 0.7 percent, Germany's DAX index gained 1 percent, and France's CAC-40 rose 1.3 percent. Japan's Nikkei stock average rose 1.6 percent.