In this Friday, June 22, 2012, photo, specialist Douglas Johnson, center, works with traders at his post on the trading floor of the New York Stock Exchange. Wall Street's open Wednesday June 27, 2012 is not expected to alter the market mood, with both Dow futures and the broader S&P 500 futures down 0.1 percent. (AP Photo/Richard Drew)
In this Friday, June 22, 2012, photo, specialist Douglas Johnson, center, works with traders at his post on the trading floor of the New York Stock Exchange. Wall Street's open Wednesday June 27, 2012 is not expected to alter the market mood, with both Dow futures and the broader S&P 500 futures down 0.1 percent. (AP Photo/Richard Drew)
A rare double shot of good news about the U.S. economy sent stocks strongly higher Tuesday. The Dow Jones industrial average rose 78 points despite lingering fear about Europe's debt turmoil.
Americans signed more contracts to buy previously occupied homes in May, matching the fastest pace in two years, the National Association of Realtors said. The report was the latest signal that the housing market is improving in many regions following a slump of more than six years.
Homebuilders soared. Lennar Corp. had reported earlier that its second-quarter profit rose as deliveries and new orders increased. Its stock jumped $1.80, or 7 percent, to $29.19, the biggest gain in the Standard & Poor's 500 index.
The ISE Homebuilders index rose 42 cents, or 4 percent, to $10.69. PulteGroup, D.R. Horton and Hovnanian Enterprises all rose sharply.
Earlier, the government said that businesses placed more orders for long-lasting manufactured goods in May, suggesting that their confidence in the U.S. economy was not shaken by signs of weakness that emerged this spring. Core goods, a measure of business investment plans, also jumped.
The reports offered a rare glimpse of good news about the U.S. economy, which continues to recover slowly despite three months of weak output and abysmal job growth. They "were really quite good," said Dennis Gartman, an economist and editor of The Gartman Letter, a source of daily market commentary.
"The economy is doing reasonably well and will continue to muddle on through," Gartman said.
The Dow rose 78 points to 12,612 as of 11 a.m. EDT. Coca-Cola had the biggest gain among the 30 stocks that make up the Dow, adding $1.15, or 2 percent, to $76.23. The beverage giant said a day earlier that it will invest an additional $3 billion in India's rapidly growing consumer market over the next eight years.
The S&P 500 rose 10 points to 1,329. Its biggest loser by far was auto parts maker O'Reilly Automotive, which fell $17.60, or 19 percent, to $78.84. O'Reilly said its second-quarter earnings will be at the low end of its earlier estimates and sales will be weaker than previously expected.
The Nasdaq composite average rose 22 points to 2,876.
Markets remain wracked with concern about Europe as leaders there prepare for a two-day summit aimed at defusing their lingering debt crisis. German Chancellor Angela Merkel warned Wednesday that there would be no quick solution to the structural issues plaguing the continent.
Europe will cause volatile stock trading in the coming weeks because the summit is unlikely to produce a lasting solution, Gartman said. He said the meeting is scheduled to be two days, but Italian Prime Minister Mario Monti promised to keep it going until Sunday if an agreement has not been reached.
"I think he can keep them there until Sunday five weeks from now and there's little chance they'll agree," Gartman said.
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Daniel Wagner can be reached at www.twitter.com/wagnerreports .
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