Strong Consumer Confidence Data Lift Dow Past 13,000
NEW YORK ( TheStreet) -- Stocks posted gains Tuesday as investors cheered a better-than-expected read on consumer confidence and overlooked weak home price data and durable goods orders.
The Conference Board's measure of consumer confidence soared to a reading of 70.8 in February from 61.5 in January. Economists were looking for a rise to 63 after an originally reported 61.1 in January.
Stocks rebounded after the release even with the downbeat economic news earlier morning. The latest measure of durable goods orders from the Commerce Department dropped 4% in January, following a 3.2% rise in December. Orders were expected to fall 1% after an originally reported 3% rise the prior month, according to estimates from Thomson Reuters.
Economists said that while the report was disappointing, a one month reading does not confirm any sort of trend. "We see no evidence of underlying slowing in the industrial economy so we look for a rebound in Feb and the re-emergence of the upward trend over the next couple of months," said Ian Shepherson, U.S. economist at High Frequency Economics.
S&P/Case Shiller reported that its 20-city home-price index saw a year-over-year 4% drop in December. Economists were looking for a 3.6% decline. "While we thought we saw some signs of stabilization in the middle of 2011, it appears that neither the economy nor consumer confidence was strong enough to move the market in a positive direction as the year ended," said the release.
The S&P 500 is still up an impressive 4.2% for the month as February draws to a close tomorrow. At the same time, the S&P 500's close at a multi-year high on Monday caused some nervousness that a market top may be coming.
"There's a predisposition of negative sentiment," said Matt Lloyd, chief investment strategist with Advisors Asset Management, adding that many investors are still thinking that what happened in the past will happen in the future. "That's why we're seeing a muddling along in the market."
On Wednesday, the European Central Bank launches its second long-term refinancing operation, which will provide an estimated $630 billion in cheap loans to the region's financial system.
Germany approved Greece's bailout with a parliamentary vote on Monday, after Chancellor Angela Merkel warned that a Greek exit from the euro would lead to "incalculable" damage. Germany's green light puts Greece one step closer to receiving its long awaited second round of funding from European creditors. The next focus for investors will be a summit meeting this Thursday and Friday, at which euro leaders will debate whether to increase the region's bailout firewall.