USA / FILE: U.S. stocks rise on Greek optimism, but housing prices fall to record levels

Record ID: 186939

  • Title: USA / FILE: U.S. stocks rise on Greek optimism, but housing prices fall to record levels
  • Date: 1st June 2011
  • Summary: RAHWAY, NEW JERSEY, UNITED STATES (FILE) (REUTERS) HOUSE WITH AMERICA FLAG IN FRONT
  • Embargoed: 16th June 2011 13:00
  • Keywords:
  • Location: Usa
  • Country: USA
  • Topics: Economic News
  • Reuters ID: LVA5C8EK68BI0GM987A0TVZKI4K4
  • Story Text: Wall Street bulls took the upper hand with a 1 percent rally on Tuesday (May 31) as hopes for a new plan to deal with Greece's debt crisis relieved some investor worry, but grim economic data suggested more hurdles ahead as the S&P 500 closed out its worst month since August.
    Stocks rebounded late in the session, nearing levels that were approached at the open, but later fell following lackluster data on U.S. Midwestern factory demand and consumer confidence.
    A Reuters poll showed investors are the most bearish they have been since the third quarter of last year on concerns about a slowing economy and the situation in Greece. Investors have cut their equity exposure for the fourth straight month.
    European officials were mulling options for a second bailout package for Greece, with private-sector participation still under discussion. Germany, which was resisting extra funding, may drop its push for an early rescheduling of Greek bonds, the Wall Street Journal reported.
    Rising expectations for a package pushed the dollar down against the euro, helping lift commodity prices and materials stocks. Crude futures rose 2 percent while Chevron Corp gained 1.6 percent to $104.91 (USD) and Alcoa Inc added 2 percent to $16.81. The S&P energy index added 1.04 percent.
    The Dow Jones industrial average shot up 128.21 points, or 1.03 percent, to 12,569.79. The Standard & Poor's 500 Index gained 14.10 points, or 1.06 percent, to 1,345.20. The Nasdaq Composite Index rose 38.44 points, or 1.37 percent, to 2,835.30.
    For May, the Dow lost 1.9 percent and the Nasdaq fell 1.3 percent. The S&P fell 1.4 percent, its worst month since August, when the U.S. Federal Reserve announced the second round of its quantitative easing program.
    U.S. single-family home prices dropped into double-dip territory in March as the housing market remained bogged down by inventory and weak demand, a closely watched survey said on Tuesday.
    According to the S&P/Case-Shiller composite index of 20 metropolitan areas, the prices dropped below their 2009 lows during the financial crisis.
    Robert Shiller, a professor of economics at Yale University and one of the originators of the index said investor sentiment was at the core of the current problem.
    "We have a sense that, government is in debt, state and local governments are in debt, I'm in debt, it just doesn't feel good right now so people are not in the mood to go out buying a big house, stretch their budget and buy a house. And those houses are sitting there. The so-called McMansions you know, are you going to stretch to buy one of those? Not unless it's a real bargain," said Shiller.
    Shiller said he can't predict what the near future will bring for the housing market, but with the glut of housing on the markets, tight credit and weak demand, all this is not a recipe for a strong rebound any time soon.
    "The concern is we're just going to get back on the down trend again. Nobody knows what its going to do, but the economy remains very week, we have a lot of worries on people's minds, and then we see after the tax credit expires, we see it going down again. You have to worry that it will go down more."
    A separate report also showed an unexpected drop in May consumer confidence, while the Institute for Supply Management-Chicago said business activity in the U.S. Midwest grew much less than expected in May.
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