Stocks rallied Tuesday, with all the major indexes rebounding from lows with big gains, as U.S. housing starts topped economists’ estimates and German business confidence unexpectedly grew.
The Dow Jones industrial average closed up 337.17, or 2,87%, at 12,103.43; the S&P 500 rose 35.95, or 2.98%, closing at 1,241.30; and the Nasdaq composite was up 80.59, or 3.19%, to close at 2,603.73. All numbers are preliminary.
U.S. builders broke ground in November on the most houses in over a year, a sign that the market is stabilizing heading into 2012. Housing starts increased 9.3% to a 685,000 annual rate, the highest level since April 2010, Commerce Department figures showed. Building permits, a proxy for future construction, also climbed to a more than one-year high.
Federal Reserve Bank of Richmond President Jeffrey Lacker predicted the U.S. economy will grow at least 2% next year, while German business confidence unexpectedly rose for a second month in December, according to the Ifo Institute.
The German Ifo Institute’s business climate index, based on a survey of 7,000 executives, increased to 107.2 from 106.6 in November, the Munich-based institute said. Economists had expected a drop to 106, the median forecast of 36 economists in a Bloomberg survey showed.
“It looks like our economy is doing pretty good despite the challenges of Europe,” said Michael Strauss, who helps oversee about $27 billion of assets as chief investment strategist at Commonfund. “We’re seeing better economic news and the housing report fits right in line with that. The data provides confirmation that the surprise may be that housing is a pretty good contributor to economic activity. It’s another piece of news that’s helping the stock market.”