The US Stocks rise for 3rd straight day after report showing big jump in home sales

Clutch Auto Ltd hits the buyer freeze. The stock was mentioned in this blog a couple of days back and Rico Auto Ltd also hits the buyer freeze.

NEW YORK -- Stocks pushed higher for a third straight day after a surprisingly strong report on housing provided the latest evidence that the economy is picking up pace.

Major indexes gained less than 1 percent in afternoon trading Tuesday after the National Association of Realtors said home resales jumped 7.4 percent in November. That was much more than the 2.5 percent increase analysts expected. The government's tax breaks have spurred sales to their highest level in nearly three years.

"Home sales were a nice surprise," said Brett D'Arcy, chief investment officer at CBIZ Wealth Management Group. "It's just another rung in the recovery ladder."

The report added to a recent string of encouraging news on the economy, including upbeat earnings and forecasts from technology companies and more corporate dealmaking.

Though the gains in stocks were modest, there were other signs that investors were feeling more confident. Bond prices fell further, pushing yields sharply higher. The gap between yields on short- and long-term bonds has widened to record levels, indicating that investors expect economic growth to lead to inflation.

Meanwhile, the dollar rose against the euro as investors bet that the U.S. will recover quicker than economies in Europe. And a gauge of the market's volatility dropped to its lowest point since May 2008. The Chicago Board Options Exchange's Volatility Index, known as the market's fear index, fell 3.8 percent to 19.72, after earlier falling as low as 16.26. It hit a record 89.5 last October during the height of the financial crisis.

D'Arcy said he expects the positive outlook on the economy to build on itself and to continue to propel the market forward through the end of the year.

In midafternoon trading, the Dow Jones industrial average rose 52.83, or 0.5 percent, to 10,466.97. The Standard & Poor's 500 index rose 4.57, or 0.4 percent, to 1,118.62, while the Nasdaq composite index rose 13.70, or 0.6 percent, to 2,251.36.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, climbed to levels not seen since August, rising to 3.75 percent from 3.68 percent late Monday.

The yield on the three-month T-bill rose to 0.08 percent from 0.05 percent. Short-term rates remain low because they are closely tied to interest rates set by the Federal Reserve. The Fed has said it has no plans to alter rates in the coming months. The growing spread between short- and long-term bonds provides further evidence investors are becoming more confident in the economy's strength.

The dollar moved higher against other major currencies. Gold prices fell to their lowest level since early November, while oil prices reversed an early slide and rose $1.04 to $74.76 a barrel on the New York Mercantile Exchange.

Wall Street typically does well in late December. Since 1950, the average return for the Dow during the week leading up to Christmas was 0.7 percent, according to Schaeffer's Investment Research. And the week following Christmas, the average return was 0.8 percent. The year-end advance is commonly known as a Santa Claus rally.

Stocks moved sharply higher on Monday as a wave of acquisitions and a push toward health care overhaul on Capitol Hill stoked investors' optimism. Stock indexes rose about 1 percent.

Corporate deals continued Tuesday, as Boston-based State Street Corp. agreed to buy the securities services business of Italian banking group Intesa Sanpaolo for $1.87 billion.

Investors were able to shrug off a government report revising lower third-quarter gross domestic product. The Commerce Department's new reading on GDP showed a growth rate of 2.2 percent, down from the previous estimate of 2.8 percent. The growth, while smaller than originally believed, still managed to break a record four straight quarters of decline.

About three stocks rose for every two that fell on the New York Stock Exchange, where volume was low at 521.5 million shares, compared with 607.7 million at the same time on Monday.

Trading is expected to be light throughout the holiday-shortened week, which can exaggerate price swings. The market is open a half day on Thursday and closed Friday for Christmas.

In other trading, the Russell 2000 index of smaller companies rose 4.85, or 0.8 percent, to 623.45.

Overseas, Japan's Nikkei stock average jumped 1.9 percent. Britain's FTSE 100 rose 0.7 percent, Germany's DAX index gained 0.3 percent, and France's.