US stocks advanced as sales of existing homes unexpectedly increased and a manufacturing gauge topped economists’ estimates, overshadowing concern General Motors Corp will file for bankruptcy.
Standard Pacific Corp led gains in 12 of 13 shares in an index of homebuilders after the National Association of Realtors reported a 2.1 per cent gain in pending home resales in February. GM slid 7.3 per cent after people familiar with the matter said President Barack Obama believes a negotiated bankruptcy is the most likely way for the company to restructure.
The Standard & Poor’s 500 Index rose 0.6 per cent to 802.29 at 10.43 am in New York, a day after capping its best monthly rally since 2002. The Dow Jones Industrial Average increased 49.38 points, or 0.7 per cent, to 7,658.3. The MSCI World Index of 23 developed nations added 1 per cent.
“From a fundamental standpoint the table has been set for financial markets to stabilise and rebound,” said William Greiner, chief investment officer at UMB Bank, which manages $9.5 billion in Kansas City, Missouri. With stocks at what he thinks will be the low end of their range over the next five years, Greiner recommended clients begin “putting some money back to work in the equity market.”
US stocks rose yesterday on speculation banks have grown more eager to lend. The S&P 500 has climbed 18 per cent since March 9, trimming its 2009 decline to 13 per cent, as banks from Citigroup to JPMorgan Chase & Co said they made money in the first two months of 2009 and US Treasury Secretary Timothy Geithner unveiled plans to rid financial firms of toxic assets.
Standard Pacific, the homebuilder that gets most of its revenue from California, rallied 5.7 per cent to lead a gauge of homebuilders across S&P indexes to a 3.2 per cent gain. Foreclosure-driven declines in home prices and lower mortgage rates will lure more buyers and help trim the property glut. Economists project the housing downturn may ease further as efforts to thaw credit and offer tax breaks to first-time buyers begin to take hold.
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GM lost 13 cents to $1.81. Obama believes a quick, negotiated bankruptcy is the most likely way for GM to restructure and become competitive, people familiar with the matter said.
Obama also is prepared to let Chrysler LLC go bankrupt and be sold off piecemeal if the third-largest US automaker can’t form an alliance with Fiat SpA, said members of Congress who were briefed on the GM and Chrysler situation before the president said two days ago that the automakers’ viability plans were insufficient.
Obama met with UK Prime Minister Gordon Brown in London today before the G-20 summit with the global economy mired in its first recession since World War II.