Stephen Bernard, AP Business Writer, On Monday July 26, 2010, 10:12 am
NEW YORK (AP) — Stocks are moderately higher after the government reported a bigger-than-expected jump in new home sales and FedEx raised its forecast for the current quarter.
Major indexes have climbed Monday after the Commerce Department said new home sales rose to an annual rate of 330,000 in June. The improvement after sales hit a record low in May eased some of investors’ concerns about the housing industry’s ongoing slump.
FedEx Corp. said its overnight and ground delivery businesses are doing better than expected. Its improved outlook is the latest upbeat earnings news to lift stocks in recent days.
The Dow Jones industrial average is up 54.12, or 0.5 percent, at 10,478.74. The Standard & Poor’s 500 index is up 6.24, or 0.6 percent, at 1,108.90, while the Nasdaq composite index is up 9.53, or 0.4 percent, at 2,279.00.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.
NEW YORK (AP) — Stocks fluctuated Monday after FedEx Corp. raised its forecast for the current quarter and said it expected a moderate recovery in the global economy.
FedEx’s outlook was the latest piece of upbeat earnings news that have lifted stocks in recent days.
The Dow Jones industrial average rose 6 points in early morning trading. If it closes up just 4 points for the day it would move back into positive territory for the year.
FedEx raised its earnings prediction for its first fiscal quarter and said it had better than expected growth in its overnight and ground delivery services. Like UPS Inc., FedEx is seen as an economic bellwether. If companies and consumers are shipping more, that points to a strengthening economy.
European markets traded in a tight range as investors had their first chance to react to a series of tests that assessed the health of the continent’s big banks. Regulators said only seven of the 91 banks tested would struggle if the European economy and government debt problems worsened.
U.S. investors were able to trade after the results were released Friday afternoon and sent stocks higher.
The market was awaiting the government’s report on new home sales during June. It is expected that sales edged higher from record lows in May as the housing market recovery remains erratic.
Stocks surged last week as mostly strong corporate earnings and outlooks, as well as the results of the European bank tests, added to hopes that the global economy is recovering. The Dow Jones industrial average jumped 3.2 percent last week.
An earnings report due out Tuesday from oil company BP PLC will likely be closely watched because of reports that embattled CEO Tony Hayward will step down and the company could take a big charge to cover costs of cleaning up the oil spill in the Gulf of Mexico.
In early trading, the Dow rose 5.75, or 0.1 percent, at 10,430.45. The Standard & Poor’s 500 index rose 0.72, or 0.1 percent, to 1,103.38, while the Nasdaq composite index fell 2.95, or 0.1 percent, to 2,266.52.
The Commerce Department was expected to report that sales of new homes rose 6.7 percent in June to an annual rate of 320,000, according to economists polled by Thomson Reuters.
The housing market, which helped push the economy into recession, remains sluggish. There was a sharp drop in sales after a government tax credit for home buyers expired at the end of April. There has been concern that the market was being propped up by that credit and it will continue to struggle to recover now that there are fewer incentives for buyers.
Any improvement in new home sales could provide some relief to investors because May’s figures fell to the lowest level since records began being kept in 1963. A smaller than expected drop in sales of previously occupied homes contributed to stocks’ rally Thursday.