Wall St sneaks up on US home sales boost

Data showing a stronger-than-expected advance in pending US home sales last month has underpinned Wall Street at the start of the week, and an easing of the price of oil also helped. In early afternoon trading in New York, the Dow Jones Industrial Average eked out a 0.11 per cent gain, the Standard & Poor's 500 Index rose 0.13 per cent and the Nasdaq Composite Index advanced 0.18 per cent. In the US, the National Association of Realtors said its Pending Home Sales Index, based on contracts signed in January, rose 2 per cent to 97.0, the highest reading since April 2010. December's reading was revised down to 95.1 from a previously reported 96.6. Economists polled by Reuters had expected signed contracts to advance 1.0 per cent. "Housing demand has bottomed, and we should see some gradual improvement in sales," Yelena Shulyatyeva, an economist at BNP Paribas in New York, told Bloomberg News. Even so, "the dark side of the story is still the oversupply and the expected pickup in foreclosures. That's what policy makers really need to think about." A separate report by the New York Federal Reserve showed that total US consumer debt declined 1.1 per cent in the fourth quarter of 2011 from the previous quarter, helped by a 1.6 per cent decrease in mortgage balances. Even so, credit inquiries climbed 2.7 per cent from the previous quarter while aggregate credit card limits also increased, by 3.6 per cent. Europe's Stoxx 600 Index ended the session with a 0.3 per cent drop for the day. In Germany, Chancellor Angela Merkel won a parliamentary vote on Greece's 130-billion euro bailout. To help stem the fallout from the euro zone's debt crisis, the European Central Bank will offer cheap three-year funds for the second time, this week. Banks are set to take 470 billion euros, according to the median of 28 estimates in a Bloomberg survey, compared with 489 billion euros at the tender December 21. "We're nowhere near the bottom of the European debt crisis," Keith Wirtz, chief investment officer for Fifth Third Asset Management in Cincinnati, told Bloomberg. "I keep hoping that the European influence will ebb. The problem is still there. We'll need to get used to volatility." Speaking of volatility, many welcome today's drop in oil prices after the recent run-up because of tension between the West and Iran. Oil today dropped for the first day after rising for seven straight sessions amid concern Europe's crisis might crimp economic growth. Oil for April delivery shed 0.9 per cent to US$108.81 a barrel at 12.42pm on the New York Mercantile Exchange.