US stocks gain after housing report

Encouraging news on the economy gave the US stock market a boost today.

Specialists Anthony Matesic, left, and John Urrbanowitz confer as they work on the floor of the New York Stock Exchange (AP)
Specialists Anthony Matesic, left, and John Urrbanowitz confer as they work on the floor of the New York Stock Exchange (AP)

Stocks also rose on expectations that the conflict between Russia and the West would not escalate further.

Russia's President Vladimir Putin is preparing to complete the annexation of the Black Sea peninsula of Crimea, but he said today that he will not take over other areas of Ukraine.

The stock market is recovering this week after logging its biggest weekly drop in almost two months.

The S&P 500 has gained 1.7% this week after dropping almost 2% last week on concerns about slowing growth in China and tensions between Russia and the West over Ukraine.

The annexation of Crimea "is a horrible thing for the world in the long term," said Uri Landesman, president of Platinum Partners. "But the market doesn't want unrest."

The Standard & Poor's 500 index rose 13.42 points, or 0.7%, to 1,872.25. The Dow Jones industrial average rose 88.97 points, or 0.6%, to 16,336.19. The Nasdaq composite climbed 53.36 points, or 1.3%, to 4,333.31.

The stock market also got a boost from two technology companies.

Microsoft jumped after Reuters reported that chief executive Satya Nadella plans to use his first big press event on March 27 to unveil an iPad version of the company's Office software suite.

Analysts regard this as a first step for Mr Nadella in repositioning Microsoft as a company that focuses on mobile devices rather than the shrinking market for personal computers.

The company's stock climbed 1.50 dollars, or 3.9%, to 39.55 dollars, its highest level since July, 2000.

Hewlett-Packard rose 1.08 dollars, or 3.7%, to 30.56 dollars after analysts at Barclays upgraded their outlook on the hardware company and raised their price target on the stock to 38 dollars from 33 dollars.

They expect HP to return more cash to shareholders and gain market share in the server business from rivals in coming months.

Stocks opened higher after Mr Putin told the Russian Parliament not to believe those who say that the country will look to take over other areas of Ukraine.

The stock market also got a lift from a report that showed inflation remains tame, despite a big rise in the cost of food.

The consumer price index rose 0.1% in February, matching January's increase, the Labour Department said today. In the past 12 months, prices have risen just 1.1%, the smallest yearly gain in five months.

That means that the Federal Reserve can continue to provide stimulus to the economy and focus on reducing unemployment and boosting economic growth without having to worry that its policies are stoking inflation.

Fed policymakers started their second meeting of the year today. The meeting will end tomorrow and be followed by an early afternoon press conference by Fed chairwoman Janet Yellen.

Most analysts expect the Fed to continue to reduce its economic stimulus by cutting back on its bond purchases. The Fed is currently buying 65 billion dollars (£39 billion) of bonds a month to hold down long term interest rates.

Investors were also encouraged by a government report on home building.

While construction of homes fell for a third month in February, the report also showed that applications for building permits reached the highest level in four months.

That raised expectations that economic growth would improve in the spring after an unusually cold winter slowed down the pace of home building, said Joe Quinlan, chief market strategist for US Trust.

"Many people in the market fell that were going to get a spring rebound, or snap back, from a sluggish first quarter," he said.

House builders rose after the report was released.

Beazer Homes USA rose 52 cents, or 2.6%, to 20.57 dollars and Ryland Group rose 1.23 dollars, or 3.1%, to 41.40 dollars. DR. Horton, PulteGroup and Lennar also rose.