Stocks Close Higher on U.S. Home Sales, Prospects for Central Bank Easing
NEW YORK ( TheStreet) -- U.S. stock markets gained Monday led by health care stocks after a report showed an improvement in home contract signings, a positive sign on national housing demand and economic momentum.
The S&P 500 added 0.7% to close at 1,593.60 while the S&P Healthcare Facilities Index was surging 6.8%.
The National Association of Realtors reported Monday that home contract signings rose to a five-year high in March excluding a surge related to the home-buyer tax credit. The index gained 1.5% last month after falling by a downwardly-revised decline of 1% in February. Economists, on average, were expecting a gain of 1%, according to a Thomson Reuters survey.
"The March pending sales reading likely points to a pick-up in existing home sales in April following a somewhat softer pace of home-buying activity at the start of the year," Yelena Shulyatyeva, an economist at BNP Paribas in New York, said in a client note.
Tenet Healthcare Corp.
Markets also appeared buoyed by indications central banks around the world will continue implementing measures to stimulate their respective economies as the Bureau of Economic Analysis reported that the core PCE price index dropped to 1.1% year-over-year in March after being unchanged on a monthly basis as personal spending ticked up 0.2% in March and personal income rose 0.2%.
"The overall picture is the same--inflation has been steadily decelerating over the past year. This will be noticed and discussed at length at this week's FOMC meeting and will keep the Fed committed to expansionary policy," noted Julia Coronado, chief economist for North America at BNP Paribas in New York.
The U.S. Federal Reserve is scheduled to make an announcement following its two-day policy meeting that ends on Wednesday while the European Central Bank is expected to do the same on Thursday. UBS Economics estimates that the ECB's Governing Council will likely to cut its benchmark refinance rate by 25 basis points to 0.5%.
--Written by Andrea Tse in New York
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