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Stock market rebounds after worst day of the year

Published on NewsOK Modified: April 16, 2013 at 6:06 pm •  Published: April 16, 2013

NEW YORK (AP) — A strong report on housing and good quarterly earnings from several major companies helped the stock market rebound after its worst day of the year.

The Dow Jones industrial average rose 157.58 points, or 1.1 percent, on Tuesday, to 14,756.78, winning back more than half of the 265 points it lost a day earlier. The Standard & Poor's 500 index climbed 22.2 points, or 1.4 percent, to 1,574.57.

Home construction at an annual rate exceeded 1 million last month for the first time since June 2008. Robust earnings from companies that included Coca-Cola and W.W. Grainger also propelled the market higher.

Monday's market decline was the biggest since November 7, the day after Election Day. Worries about an economic slowdown in China led to a drop in the price of oil, copper, and other commodities, causing mining and energy stocks to fall. The rally had already slowed earlier this month after reports of weak hiring and retail sales suggested that the economy was cooling off.

Gold, which was at the epicenter of Monday's sell-off, rose 1.9 percent to $1,387.40 an ounce.

The precious metal plunged 9 percent Monday, its steepest fall in 30 years. Investors were spooked after China reported economic growth of 7.7 percent, slower than many forecasts. They also sold the metal following another report of low inflation. People often buy gold when they're fearful of rising prices and sell it when they see inflation ebbing.

Gold is down 27 percent since it climbed to a record of $1,892 an ounce in August 2011.

"This is the first time in a while that we've had pretty positive numbers," said JJ Kinahan, chief derivatives strategist for TD Ameritrade. "We had one bad day yesterday. You can't say because of that one bad day that all bets are off."

While Chinese growth fell short of expectations, Monday's sell-off may have been disproportionate to the slight slowdown in China's growth.

Growth in the world's second biggest economy missed analysts' forecasts by just 0.3 percentage points. China is watched closely because it is a major market for foreign goods from iron ore to smartphones. Investors hope demand from China can help offset weakness in the U.S., Europe and Japan.

Mining companies rose Tuesday as commodities markets stabilized. Materials stocks gained the most of the 10 industry groups in the S&P 500 after leading the market lower the day before. Home builders advanced following the housing report. PulteGroup rose 4.2 percent to $18.60 and Lennar climbed 2.4 percent to $38.70.

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