Stocks Hold Gains Despite Bad Housing News

Investors were relieved Tuesday after a government report on the economy met expectations and eased their concerns that the recession is deepening.

In midmorning trading, the Dow Jones industrial average rose 11.79, or 0.14 percent, to 8,531.56.

The Commerce Department reported third-quarter gross domestic product, a measure of the economy that tallies the value of goods and services, fell at an annual rate of 0.5 percent. That was in line with analysts' expectations and matched the government's estimate of a month ago.

While the readings show further weakness, investors have likely already priced in very low expectations. The concern, however, is that the current quarter will be much worse.

That also helped investors get past a report that showed sales of new homes fell in November to the slowest pace in nearly 18 years, while new home prices dropped by the biggest amount in eight months.

New home sales fell by 2.9 percent to a seasonally adjusted annual sales pace of 407,000 units, a weaker performance than economists had expected and was the slowest sales pace since January 1991. The median price of a new home sold in November was $220,400, a drop of 11.5 percent from the sales price a year ago.

Copyright AP - Associated Press
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