Dow up 200 points, stock prices rocket

Dow rockets, stock prices jump

Adam Shell, USA TODAY11:15 a.m. EDT May 28, 2013

Sentiment boosted by rising home prices, consumer confidence at 5-year high
Dow on track to close higher for 20th straight Tuesday

Benchmark indexes jumped Tuesday morning with the Dow Jones industrial average up more than 200 points. The Dow, the Standard & Poor's 500 index and the Nasdaq composite index popped about 1.3% higher in the first hour of trading.

The strength of the rally surprised market-watchers, many of whom have been predicting some kind of pullback or correction after stocks have set record after record closing highs in 2013. Some of the bullish sentiment was fueled by a report out Tuesday showing consumer confidence hit a five-year high in May.

The Conference Board, a New York-based private research group, says its consumer confidence index rose in May to 76.2, the second straight increase. That's up from a reading of 69.0 in April and the highest since February 2008.

Also on Tuesday, a better-than-expected report on the housing market showed home prices continued to rebound in 20 key cities in March and a widely followed report on consumer confidence, due out at 10 a.m., is expected to show the economic outlook remains bright.

The Dow's big rally to start the week puts it on track for its biggest one-day point gain since the first trading day of the year on Jan. 2, when it powered up more than 308 points.

If the Dow keeps its gains throughout the day, it would be the 20th straight Tuesday in 2013 that the 30-stock index has closed higher, most of the time at record highs. And both the Dow and the S&P 500 are flirting with intraday all-time highs set in recent weeks while the Nasdaq is hitting levels not seen since 2008.

Tuesday's rally is being driven by a number of factors, says Quincy Krosby, market strategist at Prudential Financial.

• A strong stock market performance in Asia and Europe where benchmark indexes are up 1% to 2%.

• The one-two punch of strong news on the U.S. housing market, which hit its highest level in nearly seven years, and the highest reading on consumer confidence in five years.

• Investors' reassessment of all the talk last week regarding the Federal Reserve's plans to slow its purchases of bonds, perhaps earlier than expected. After a weekend to digest what the Fed said, Wall Street is now betting that the Fed's moves will be "data dependent." And since the current 7.5% rate of unemployment is far shy of the 6.5% Fed target, it's unlikely the Fed will dial down its bond-buying program prematurely.

Also adding to the bullish tone was the European Central Bank reiterating that they would continue to provide liquidity to markets and could cut interest rates, says Krosby.

Many money manager, she adds, "have missed out" on the year's big gains and are likely jumping into stocks in an effort not to be left behind.

"Overall, the stock market is moving higher on continued liquidity from central banks and better economic data," Krosby says.

On Friday, the Dow closed up 8.60 points to 15,303. The S&P 500 eased 0.92 to 1,649 and the Nasdaq composite index slipped 0.27 to 3,459.

FRIDAY: Stocks end week mixed; Dow up

The Nikkei 225 index rose 1.2% to 14,311.98. The benchmark fell 3% on Tuesday. Markets in Europe were also advancing, with the Europe Stoxx 600 benchmark index up over 1%.

Benchmark oil for July delivery was up approximately $1.25 to about $95.40 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 10 cents to close at $94.15 per barrel on the Nymex on Friday.

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