Stocks Gained on Housing Data. Dow Turned Positive for the Year. Dow Leaders: PFE, BAC, GE, HD, and DD

Published on Monday, 26 July 2010 19:28 Written by Christopher Lynn

New York, July 26^th (TradersHuddle.com) – Stocks gained, with the Dow turning positive for the year, as a surge in new home sales and an increased outlook from FedEx boosted sentiment and signaled that the economic pace is likely better than previously thought.

The Dow Jones Industrial Average gained 100.81 points, or 0.97%. The S&P 500 index climbed 12.35 points, or 1.12%, while the NASDAQ jumped 26.96 points, or 1.19%. Market breadth was positive. On the NYSE, winners topped decliners by a rate of 15 to 4. On the NASDAQ, advancers outpaced losers by a rate of 16 to 5.

The market started on slightly negative territory, as investors digested last week’s gain on the back of strong earnings reports and as European shares were mixed with investors still going through the results of the banks stress tests. But stocks turned positive as FedEx (NYSE:FDX), the express package Delivery Company and economic bellwether boosted sentiment after raising its outlook.

FedEx said it has seen higher-than-expected volume in its Express and Ground businesses and now expects to earn $4.60 to $5.20 per share, 20 cents higher on each end of the forecast that what was previously estimated.

Also in the morning a better than expected report in new home sales, which showed a close to a 24% month over month surge. The positive headlines helped drive stocks higher, but resistance at the S&P 500's 200-day moving average kept a cap on gains until another round of buying helped the broad market measure settle above the key hurdle for the first time in one month.

The euro had a strong session. Specifically, the currency climbed 0.7% against the greenback to settle near $1.30, close to its two-month high. The euro strength helped the equities market to break through resistance.

Pfizer (NYSE:PFE), led the blue chip index that erased losses for the year, as the largest pharmaceutical company in the world, surged 3.02% to $15.02. Pfizer announced that the FDA approved a higher dose of Aricept for the treatment of moderate to severe Alzheimer’s disease.

Industrials, financials, telecom, and consumer discretionary were the best performing sectors. Industrials gained 1.7%, posting the best gains amid the 10 key S&P 500 sectors. The sector had the best reaction to FedEx increased outlook, as it signal that economic activity is not as bad as previously thought, pushing investors back into the cyclical sector. Leading the sector, General Electric (NYSE:GE), the diversified conglomerate maker of aircraft engines and power turbines jumped 2.74% to $16.14. GE posted the third biggest percentage gain in the Dow Jones Industrial Average.

Financial shares moved higher, as the prospects of a better housing sector and more economic activity bode well for the bottom line of the sector. Shares of financial companies gained 1.6% as a group, with Bank of America (NYSE:BAC), the largest U.S. lender, jumping 2.98% to $14.15. Bank of America was the second best Dow component.

Home Depot (NYSE:HD), the largest home improvement retailer, climbed 2.62% to $28.99, posting the fourth largest percentage gain in the blue chip index. Home Depot climbed on the surge of new home sales to an annualized rate of 330,000 units. The move helped the consumer discretionary sector to a gain of 1.5%.

DuPont (NYSE:DD), the third largest U.S. chemical maker, rounded the Dow top five percentage gainers, as investors pushed the stock higher ahead of its quarterly earnings report. Shares of DuPont gained 1.70% to $38.99, ahead of tomorrow’s corporate results. Analysts expect the company to report a jump in profit to $0.93 per share.

Meanwhile, Treasuries declined, pushing yields up from close to record low levels, as equities gained. The yield on the benchmark 10-year note climbed to 2.99%.