Wall Street edged higher on Tuesday on some positive news regarding home sales. The Dow Jones Industrial Average gained 141.53 points (1.78%) and the S&P 500 was also up 13.07 points (1.58%).
The good news from the housing industry came as a surprise, as the National Association of Realtors reported that pending sales for pre-owned homes in December rose 6.3%, compared to home sales in November. The reason for the increase in home sales is due to the fact that buyers are taking advantage of opportunities to buy homes that are being sold for steeply discounted prices. This news could potentially be an indicator that the slump in the housing industry is subsiding, and investors on Wall Street capitalized on the news by pushing the markets higher.
Many companies came out with corporate earnings today, and the results were mixed. Motorola (MOT) lost $3.6 billion last quarter, and Disney (DIS) reported a 32% drop in profits for the 4th-quarter. Drugmaker Merck (MRK) reported better than expected numbers, and homebuilder D.R. Horton (DHI) also reported a narrower loss than analysts expected.
Another depressing statistic came from the U.S. auto industry, as U.S. car and truck sales fell 37% in January. Sales at General Motors (GM) fell 49% and sales at Ford also fell 40%. This is a horrible start to 2009 for automakers, as people are clearly still not spending their money to purchase cars. What makes it even worse for carmakers is that home sales actually increased but car sales were still abysmal, showing that the housing industry might recover before the auto industry does.
Tomorrow, many companies are coming out with their 4th-quarter earnings, so it should be another interesting day on Wall Street.
Until tomorrow,
Niki Pezeshki
College Trillionaire
CT Note: Today’s Stock of the Day will be Coca-Cola (KO), but it will be posted a little later than usual. Keep reading College Trillionaires!
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