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Robust U.S. housing data pushes Dow to new high

Robust U.S. housing data pushes Dow to new high

U.S. stocks rallied Wednesday, pushing the Dow Jones Industrial Average to a new closing high above the 12,500 mark, as unexpectedly robust housing sales data cheered investors making last-minute additions to their 2006 portfolios.
"The last days at the end of the year and the first few days of a new year have tended to be positive for equities," said Michael Sheldon, chief market strategist at Spencer Clarke. "You would probably have to be a psychologist to know why, but these days usually are positive for equities. And investors know this."
In addition, above-forecast new home sales numbers for November "have some investors moving toward the opinion that the housing market may have bottomed out," Sheldon said. "This could lead to greater strength in the economy in 2007 than expected."
The Dow Jones Industrial Average rose 102.94 points to 12,510.57, surpassing its December 19 prior closing high of 12,471, after breaking through the 12,500 level for the first time late in the session.
Volume was light, with 972 million shares traded on the New York Stock Exchange, where there were 26 rising stocks for every 7 shares declining. About 1.234 million shares traded in the Nasdaq market; there were 21 winners for every 8 losers.
The Commerce Department said new home sales in November rose 3.4 percent to 1.047 million. That level surpassed a MarketWatch forecast, based on a poll of economists, is for 1.02 million homes sales.
In recent months, data reports have showed that the housing sector is slowing. But there is debate among economists as to whether the slowdown will be confined to that sector or spread to the broader economy.
Joe Battipaglia, chief investment officer at Ryan, Beck & Co., cautioned investors against concluding that the latest housing report means the real estate sector can't decline further in 2007.
"It remains to be seen what is going on with housing," he said. "I think there are still problems with inventory and mortgage applications. But the November data has given the market something to rally off today."