Stocks Sing as U.S. Economic Data Strengthen

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NEW YORK ( TheStreet) -- Major U.S. stock markets closed near session highs Tuesday as better-than-expected new home sales and encouraging data on durable-goods orders bolstered the outlook for recovery in the world's largest economy.

The S&P 500 rose 0.95% to 1,588.03 while the Dow Jones Industrial Average advanced 0.69% to 14,760.31. The Nasdaq tacked on 0.82% to 3,347.89.

Stocks posted a strong trading session Tuesday, a day after tumbling on mixed messages from Federal Reserve presidents about when the central bank should taper its monetary stimulus programs. The benchmark 10-year Treasury note on Tuesday fell 17/32, boosting the yield to 2.606%. Treasury yields have witnessed a rapid increase since May, while stocks have struggled to push into positive territory.

"There's a fundamental problem here that the markets are wrestling with, and I think that's why you're seeing the divergence for today at least in the equity markets and the interest rates, we don't actually have price discovery in the interest rate market," said Brad McMillan, chief investment officer for Commonwealth Financial. "Everyone is struggling with 'well, OK, what should prices really be?'"

New home sales rose 2.1% to a seasonally adjusted annual rate of 476,000 in May, after an upwardly-revised April annual rate of 466,000, according to data compiled by the Census Bureau. The report exceeded the average economist expectation of an increase to 462,000.

Homebuilder stocks were further aided by homebuilder Lennar which posted earnings that exceeded forecasts. Lennar added 0.69% to $35.23 as the Miami-based builder and financier beat fiscal second-quarter earnings estimates by ten cents and exceeded sales expectations. PulteGroup, another homebuilder, gained 3.9% to $19.02.

The S&P/Case-Shiller 20-city home price index showed a stronger than expected year-over-year gain of 12.1% in April after an increase of 10.9% in March, driven by a broad-based recovery in home prices across the nation. A rise of 10.6% for April was expected. On a month-to-month basis, the composite showed an increase of 2.5%, the highest monthly gain in the history of S&P/Case-Shiller Home Price Indices.

The Federal Housing Finance Agency House Price Index also showed a gain, up 0.7% in April after an upwardly-revised increase of 1.5% in March.

The Census Bureau reported that durable-goods orders increased 3.6% in May after rising by an upwardly-revised 3.6% in April. Durable-goods orders excluding the transportation component rose 0.7% after gaining by an upwardly-revised 1.7%. Economists, on average, were expecting a durable-goods orders increase of 3% in May and predicted an unchanged core orders figure.

Meanwhile the Conference Board Consumer Confidence Index, which had improved in May, increased again in June. The Index now stands at 81.4, up from 74.3 in May. Economists were expecting a decline to 75.4.

In company news, Seattle Genetics slid 0.67% to $29.70 after the company confirmed Tuesday that a small clinical study treating elderly Hodgkin lymphoma patients with a combination of Seattle Genetics' Adcetris and chemotherapy has been stopped temporarily due to reports of pancreatitis, a dangerous swelling of the pancreas.