U.S. stocks and exchange traded funds (ETFs) are continuing their rally this morning as investors are upbeat and optimistic about economic indicators.
First out of the gates was better than expected data for pending U.S. home sales. The data indicate that Americans signing contracts to buy used homes increased for a second consecutive month. The 3.2% increase in the index destroyed analysts’ expectations of no change in the index.
Many believe that lower values caused by increases in foreclosures and declines in mortgage rates are making homes more affordable and paving a path out of the recession, states Courtney Schlisserman of Bloomberg. The iShares Dow Jones U.S. Real Esatate (IYR), was up nearly 3% in intraday trading, despite being down about 12% for the year.
Next, was the Commerce Department’s report on construction spending. To much surprise, construction spending increased by 0.3% in March, enabling the indicator to post its best showing since last September and beat economists’ expectations of a 1.5% decline. The increase was mainly fueled by increases in government and commercial projects. This is just another indicator that the housing and construction industries might have seen a bottom and could do nothing but go up, states Martin Crutsinger of the Associated Press. As always, though, watch the trends first.
The PowerShares Dynamic Building and Construction Index (PKB), was up 5.2% in intraday trading, despite being down 8.9% for the year.
The rally in the markets was further supported by U.S. Treasury Secretary Timothy Geithner’s plan to finance the purchase of as much as $1.1 trillion in illiquid assets from banks to try to get the wheels churning in the financial sector and pull us out of the recession.