Markets opened lower following the Memorial Day weekend on Tuesday, but roughly 90 minutes into the session all three indexes were climbing following an optimistic report on Consumer Confidence from 10 am.
The S&P 500 has gained 1.93% to 904, the Dow has similarly climbed 1.89% to 8433, and the Nasdaq has soared 2.67% to 1737. The market gains are taking place despite a grim report from 9 am indicating that, as of March, home prices had fallen more than expected.
The 20-city composite measure from the S&P/Case-Shiller Home Price Index declined by 18.7% in March, against expectations of a -18.40% reading. The data caused David Blitzer, Chairman of the Index Committee at Standard & Poor’s, to refute recent claims of stabilization in the housing market.
“Based on the March data, we see no evidence that that a recovery in home prices has begun,” he said.
Millan Mulraine, economics strategist at TD Securities, added the prices have fallen a “staggering 32.2%” since the housing bubble burst, including a 2.2% monthly loss in this report.
Still, more than two-thirds of GDP in the U.S. in consumer-driven, so markets were able to become optimistic when a consumer confidence report hit an 8-month high.
The Conference Board’s measure of Consumer Confidence surged past all forecasts to a score of 54.9, just more than 14 points higher than April’s upwardly revised 40.8 reading.
Both major components saw a gain this month. The index of present conditions climbed to 28.9 in May, up from 25.5 in April, while the measure of six-month expectations soared to 72.3, the highest level in 16 months.
“While confidence is still weak by historical standards, as far as consumers are concerned, the worst is now behind us," said Lynn Franco, director of the Board’s consumer research center.
The report wasn’t all good news though. “Plans to buy a home within the next six months fell to a 3-month low, with particular softness in 'lived in' homes,” commented Jennifer Lee from BMO Capital Markets. “This is likely due to the steady drip, drip drip move in house prices.”
No more data is scheduled for Tuesday, but it will be an important week for housing with MBA Applications and Existing Home Sales on Wednesday and New Home Sales on Thursday.