Today: The U.S. economy continues to churn out strong signals, helping Wall Street chug to near-record levels again. Also: Netflix (NFLX), Yahoo (YHOO) and Hewlett-Packard (HPQ) keep rising as T-Mobile switches the script.
Good news on home prices, manufacturing sends S&P near record
As the Dow Jones industrial average was headed toward record highs this winter, the manufacturing and housing industries were booming toward better health, according to reports released Tuesday. Those reports, in turn, helped send the Standard & Poor's 500 near its own record high, with the more broad-based index ending just points shy of the mark.
The housing market, which has already been booming in terms of sales in 2013, showed a dramatic rise in prices at the beginning of the year, the Case-Schiller index showed. The tallying of home sales and prices in 20 major metro markets showed a price increase of 8.1 percent year-over-year in January, the largest gain in almost seven years. Price increases in the Bay Area were even greater, at more than 17 percent.
While consumer confidence continues to waver, including a dip in March blamed on the sequester, a rise in home prices is likely to free up equity loans and provide more freedom to cash-strapped homeowners who survived the mortgage crisis without defaulting.
"Lenders are starting to come back into the marketplace," Greg McBride, a senior financial analyst at Bankrate, told Bloomberg News. "We're not going back to the 'Wild, Wild West' we saw during the real estate boom, but we are going to see more people spending their equity."
While consumers seem to be in good shape, businesses are also showing greater signs of optimism and activity, with factories jumping to life in February, when the Commerce Department tracked higher durable-goods orders. The metric also showed strong gains in January, leading economists to believe that commerce is flowing well to begin 2013.
"The picture of business spending to start the year is fairly healthy," BTIG chief global strategist Dan Greenhaus told The Associated Press.
The good news was enough to turn around Wall Street, which bounced back from worries about the European economy to send stocks up.
"I think the batch of data was enough to convince investors that the U.S. economy is on the right track," Andrew Wilkinson, chief economic strategist at Miller Tabak, told Reuters. "At this point, it's hard to argue that anything will derail the U.S. economy, and that is boosting investors' confidence as they continue to load up on equities."
The Dow Jones yet again closed at a record high after gaining nearly 112 points, and the S&P ended less than two points shy of its all-time closing high. That news should calm investors and analysts such as Schaeffer's technical strategist Ryan Detrick, who voiced concern that the Dow setting records without similar marks from the broader index could signal a false boom.
Netflix, HP and Yahoo lead tech stocks, a 2013 trend
Technology stocks gave a large assist to Tuesday's gains, with Netflix leading the way. The Los Gatos video-on-demand company had the best percentage gain in the S&P index on Tuesday, gaining 5.4 percent to $190.61 after Pacific Crest gave a big boost to its price target for the stock on the belief that Netflix's trove of info on its customers would help the company's decision-making.
"Netflix's huge database of subscriber viewing habits should allow it to invest in original content where it will be most effective, while purchasing third-party content across an array of genres that can attract an extremely large audience," analyst Andy Hargreaves wrote.
Hewlett-Packard also gained, as uncertainty surrounding the next move of rival Dell continued. There are now three suitors looking to purchase the No. 2 U.S. personal-computer company, with founder Michael Dell clouding the picture. The No. 1 PC maker, meanwhile, continued to gain with a 2.3 percent increase to $23.64, HP's highest closing price in nearly a year; Dell dropped 0.1 percent to $14.49.
Yahoo continued to trade at its highest level since 2008, increasing another 0.9 percent Tuesday to close at $23.59 after Monday's acquisition maintained its focus on mobile.
The three companies, all of which hit doldrums in 2012, have been some of Silicon Valley's biggest stock success in 2013. Thus far this year, Netflix is up 105.9 percent, HP has increased 65.9 percent and Yahoo has gained 18.5 percent.
T-Mobile debuts new plan for consumers, gets iPhone
T-Mobile is struggling to compete with the larger mobile carriers in the United States, so Tuesday it took a drastic step of completely changing its subscriber model in an attempt to offer a definitive difference to consumers.
While announcing that it would finally offer the iPhone thanks to an expanding 4G, or LTE, network that will debut soon in San Jose, the company also confirmed its expected move away from long-term contracts tied to a subsidized smartphone. Instead, the company will charge less initially for the phone, but charge a monthly fee until the device is paid off, on top of service fees. If a customer wishes to stop receiving service from T-Mobile, he or she will still owe the remaining price of the phone but will not be locked into monthly service charges.
With plans starting at $50 a month, customers could have an iPhone 5 for $100 and monthly costs of $70, both totals representing discounts from the company's larger rivals. However, analysts still aren't sure the attempt will pay off.
"Even if they're $5 cheaper, will that be enough? They're already charging a significant discount to Verizon and AT&T, and they're losing customers," Recon Analytic telecommunications analyst Roger Entner noted to AP.
Silicon Valley tech stocks
Up: Netflix, Intel (INTC), HP, SolarCity, Gilead, eBay (EBAY), Intuit (INTU), Electronic Arts (ERTS), Advanced Micro Devices, Oracle (ORCL), Yahoo, Tesla, Yelp, Nvidia, Adobe (ADBE), Applied Materials
The tech-heavy Nasdaq composite index: Up 17.18, or 0.53 percent, to 3,252.48
The blue chip Dow Jones industrial average: Up 111.9, or 0.77 percent, to 14,559.65
And the widely watched Standard & Poor's 500 index: Up 12.08, or 0.78 percent, to 1,563.77
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.