NEW YORK (AP) — Stocks surged in early trading Tuesday after U.S. home prices rose the most in seven years and consumer confidence rose to a five-year high.
A recovery in the housing market has been an important factor driving the stock market to record highs this year. That rally appeared to be faltering last week after the Dow Jones industrial average and the Standard & Poor's 500 index logged their first weekly losses in four weeks.
Home builder stocks had some of the biggest gains early Tuesday after the Standard & Poor's/Case-Shiller survey found that home prices in the U.S. rose 10.9 percent in March, the most since April 2006. A growing number of buyers are bidding on a tight supply of homes. The survey was released before the stock market opened.
PulteGroup rose 64 cents, or 2.8 percent, to $23.37 and D.R. Horton climbed 63 cents, or 2.4 percent, to $26.37.
Stocks extended their gains after the Conference Board reported at 10 a.m. that its measure of consumer confidence rose in May to its highest level since February 2008.
The Dow was up 213 points, or 1.4 percent, to 15,516 as of 10:22 a.m. Eastern Daylight Time. The S&P 500 index rose 24 points, or 1.5 percent, to 1,673.
Markets were closed Monday for the Memorial Day holiday.
Bond prices fell and their yields rose as traders moved money out of ultra-safe assets. The yield on the benchmark 10-year Treasury note rose to 2.08 percent from 2.01 percent. The yield is close to its highest level in more than a year.
Traders were also encouraged by gains in overseas markets
Japan's benchmark Nikkei rose 1.2 percent. The index plunged 7.3 percent Thursday on concerns about Japan's massive economic stimulus program. European markets also rose. Britain's FTSE 100 jumped 2 percent and Germany's DAX gained climbed 1.6 percent.
In commodities trading, the price of oil rose $1.49, or 1.5 percent, to $95.63. Gold fell $6.60, or 0.4 percent, to $1,379.90 an ounce. The dollar was little changed against the euro and rose against the Japanese yen.
The Dow has advanced 18 percent this year and the S&P 500 index in 17 percent higher as investors have piled into stocks.
The Nasdaq composite index climbed 55 points, or 1.6 percent, to 3,514.
Among stocks making big moves, Tiffany rose $4.39, or 5.8 percent, to $80.59 after the high-end jewelry seller said its first quarter net income rose 3 percent as sales improved across all regions. The results beat the forecasts of Wall Street analysts.