Stocks hold gains despite sluggish housing data
NEW YORK ” Investors were relieved Tuesday after a government report on the economy met expectations and eased their concerns that the recession is deepening.
The Commerce Department reported third-quarter gross domestic product, a measure of the economy that tallies the value of goods and services, fell at an annual rate of 0.5 percent. That was in line with analysts’ expectations and matched the government’s estimate of a month ago.
While the readings show further weakness, investors have likely already priced in very low expectations. The concern, however, is that the current quarter will be much worse.
The market was also able to get past a report that showed sales of new homes fell in November to the slowest pace in nearly 18 years, while new home prices dropped by the biggest amount in eight months.
New home sales fell by 2.9 percent to a seasonally adjusted annual sales pace of 407,000 units, a weaker performance than economists had expected and was the slowest sales pace since January 1991. The median price of a new home sold in November was $220,400, a drop of 11.5 percent from the sales price a year ago.
Trading volume was light, and is expected to remain so the rest of this week as investors head into the holidays. Analysts are mindful that light volume tends to skew the market’s movements, and warned that this week may not suggest any long-term trends.
“Don’t read too much into the numbers until the end of the day, we’re really in a holding pattern right now,” said Ryan Larson, head of equity trading at Voyageur Asset Management. “It is a very quiet news week, and much of it has already been priced into the market.”
In late morning trading, the Dow Jones industrial average rose 20.87, or 0.24 percent, to 8,540.64.