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Stock market rebounds from worst day of the year

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Good news on housing and earnings Tuesday morning helped stocks begin a rebound from their worst day of the year.

The Dow Jones industrial average rose 134 points, or 0.9 percent, to 14,733 as of 11:55 a.m., winning back some of the 265 points it lost a day earlier.

Home construction topped 1 million last month, the highest level since June 2008. Strong earnings from companies including Coca-Cola also propelled the market higher.

Optimism about housing and a pickup in hiring were major catalysts driving the stock market's surge early this year. The Dow and the Standard & Poor's 500 jumped 11.3 percent and 10.3 percent, respectively, in the first three months of 2013.

That run-up was interrupted Monday when stocks had their biggest decline since November. Worries about an economic slowdown in China led to a drop in prices for oil, copper, and other commodities, causing mining and energy stocks to fall. The rally had also slowed at the start of this month after reports suggested that the economy was slowing down.

"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."

Many of those stocks were rising Tuesday as commodities markets stabilized.

Gold, which was at the epicenter of Monday's sell-off, rose $25.50, to $1,380 an ounce.

The precious metal logged its steepest fall in 30 years Monday, falling $140 an ounce in a selling frenzy. Investors started selling gold Friday after the government reported a drop in inflation. People often buy gold when they're fearful of rising prices and sell it when they see inflation ebbing.

Copper was little changed. Crude oil fell 91 cents, to $88 a barrel.

Materials stocks rose the most of the 10 industry groups in the S&P after leading the market lower the day before. Freeport-McMoRan Copper & Gold was up 1.2 percent at $29.61, a day after plunging 8 percent, the biggest drop in the S&P 500 index.

Home builders rose following the housing report. PulteGroup rose 34 cents, to $18.18, and Lennar climbed 43 cents, to $38.24.

In other trading, the Standard & Poor's 500 climbed 13.3 points, or 0.85 percent, to 1,565. The NASDAQ composite rose 31 points, or 0.9 percent, to 3,247.

Small company stocks performed better than the broader market. The Russell 2000 index climbed 10.5 points, or 1.2 percent, to 917.70. The index plunged 3.8 percent Monday.

Coca-Cola gained $2.09, to $42.18, after its first-quarter results came in above Wall Street's forecasts. Coke said it struck a deal to start refranchising its business in the U.S., which will lower costs.
 

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