A rare double shot of good news about the U.S. economy sent stocks strongly higher Wednesday. The Dow Jones industrial average rose 92 points despite lingering fear about Europe's debt turmoil.
Americans signed more contracts to buy previously occupied homes in May, matching the fastest pace in two years, the National Association of Realtors said. It was the latest signal that the housing market is improving in many regions following a slump of more than six years.
Homebuilders soared. Lennar Corp. jumped $1.31, or 5 percent, to $28.70. That company had reported earlier that its second-quarter profit rose as it boosted deliveries and new orders. PulteGroup, D.R. Horton and Hovnanian Enterprises also rose sharply.
Earlier, the government said that businesses placed more orders for long-lasting manufactured goods in May, suggesting that their confidence in the U.S. economy was not shaken by signs of weakness that emerged this spring. Core goods, a measure of business investment plans, also jumped.
The reports "were really quite good," boosting hopes about the economic recovery after three months of weak output and abysmal job growth, said Dennis Gartman, an economist and editor of The Gartman Letter, a source of daily market commentary.
"The economy is doing reasonably well and will continue to muddle on through," Gartman said.
The Dow closed up 92.34 points, or 0.7 percent, at 12,627.01. Coca-Cola rose $1.26, or 2 percent, to $76.34, after saying it will invest another $3 billion in India's rapidly growing consumer market over the next eight years.
The Standard & Poor's 500 index rose 11.86 points, or 0.9 percent, to 1,331.85. Its biggest loser by far was auto parts maker O'Reilly Automotive, which fell $13.83, or 14 percent, to $82.61. O'Reilly said its second-quarter earnings will be at the low end of its earlier estimates and sales will be weaker than previously expected.
H&R Block leapt 58 cents, or 4 percent, to $15.67. The tax preparation company posted a lower fourth-quarter profit than analyst had expected, but the company gained valuable market share while cutting jobs and closing stores to focus on electronic tax filing.
The Nasdaq composite average rose 21.26 points to 2,875.32.
Investors remain wracked with concern about Europe as leaders there prepare for a two-day summit aimed at defusing their lingering debt crisis. German Chancellor Angela Merkel warned Wednesday that there would be no quick solution to the structural issues plaguing the continent.
Europe will cause volatile stock trading in the coming weeks because the summit is unlikely to produce a lasting solution, Gartman said. The meeting is scheduled to be two days, he said, but Italian Prime Minister Mario Monti promised to keep it going until Sunday if an agreement has not been reached.
"I think he can keep them there until Sunday five weeks from now and there's little chance they'll agree," Gartman said.
Daniel Wagner can be reached at www.twitter.com/wagnerreports .