U.S. stocks rose on Wednesday as investors dipped back into the market after the recent pullback from a rally that lifted the S&P 500 to just shy of five-year highs.
Housing stocks were among the day’s leaders following stronger-than-expected data on home sales. The PHLX housing sector index jumped 2.2 percent,led by a 4.3 percent advance in PulteGroup,the second-largest U.S. home builder,to $16.43.
The pace of U.S. home resales rose 7.8 percent in August,the fastest in more than two years. Housing starts also climbed,a hopeful sign that a budding housing market recovery is gaining traction.
The reports came as investors looked for improving economic data to help bolster a rally of 5.9 percent in the S&P 500 since the start of August.
The recent pullback in prices was all about healthy profit-taking after the big rally we had last week,said Neil Massa,senior U.S. trader at MFC Global Investment Management,in Boston. Now people are buying.
The Dow Jones industrial average rose 13.32 points,or 0.10 percent,to end at 13,577.96. The Standard & Poor’s 500 Index added 1.73 points,or 0.12 percent,to finish at 1,461.05. The Nasdaq Composite Index gained 4.82 points,or 0.15 percent,to close at 3,182.62.
Last week,the S&P 500 reached its highest closing levels since December 2007 following a decision by the U.S. Federal Reserve to launch a new round of economic stimulus. The market pulled back or ended flat for two days,causing some investors to get back into stocks that had lost ground.
Industrial conglomerate 3M Co was the latest major U.S. company after FedEx to sound a note of caution about the economy. 3M said the economic environment has changed since the company adopted its long-term revenue growth target of 7 percent to 8 percent,and it now views that range as a stretch target. Shares of 3M,a Dow component,edged up 0.2 percent to $93.63.
Both 3M and FedEx are viewed as economic bellwethers because they are involved with so many sectors of the economy. Their warnings come as S&P 500 companies are expected to post a 2 percent contraction in third-quarter earnings.
As of Friday,there were 88 major companies that have lowered their profit expectations,compared with 21 positive announcements. The ratio is the weakest showing since the third quarter of 2001,according to Thomson Reuters data.
Oil-related stocks fell as U.S. crude slid for the third straight day after Saudi Arabia said it would take action to keep prices in check. The PHLX oil service sector index shed 1.07 percent.
General Mills Inc reported higher quarterly earnings on Wednesday,helped by recent acquisitions,and stood by its full-year outlook. The shares rose 1.8 percent to $40.02.
Questcor Pharmaceuticals Inc plunged 47.8 percent to $26.35 after Aetna Inc,America’s third-largest health insurer,dropped coverage for the company’s only product,Acthar Gel,for all but one condition,to treat spasms in babies.
Volume was slightly lower than average,with roughly 6.12 billion shares traded on the New York Stock Exchange,the Nasdaq and the Amex,compared with the year-to-date average daily closing volume of 6.54 billion.
Advancers outnumbered decliners on the NYSE by about 17 to 13. On the Nasdaq,the opposite trend prevailed,with about 13 stocks falling for every 12 that rose.