Wall Street Rises Despite Poor Economic Data, Fed Comments

January 6, 2009 4:54 p.m. EST

New York. NY (AHN) - U.S. markets were able to hold on to early gains Tuesday despite record low pending home sales data and the release of the latest Federal minutes, stating further deterioration has been seen.

In its release, the Federal Reserve said there was significant contraction in economic activity in the fourth quarter. The Fed minutes are from the Dec. 16 Federal Open Market Committee meeting. The Fed also said it expects unemployment to rise significantly in 2010.

The Dow Jones Industrial average added 62 points or 0.7 percent. 19 of 30 Dow components finished Tuesday with a gain. Hewlett Packard, up 8.2 percent, led all Dow gainers as tech stocks were strong on a whole.

The S&P 500 rose 7 points or 0.8 percent. Six of 10 major economic sectors finished the session higher.

The materials sector rose 1.9 percent after Mosaic reported better than expected quarterly earnings. Consumer discretionary stocks were strong as well, the sector added 1.8 percent on Tuesday.

Tech was the strongest as the Nasdaq Composite added 24 points or 1.5 percent. Tech received a bump from the chip stocks with the Philadelphia Semiconductor Index adding 5 percent on Tuesday.

The price of crude oil gave back early gains to settle near the unchanged mark at $48.85 a barrel.

On the economic front, The Commerce Department said factory orders fell 4.6 percent in November; the decline follows a 6 percent drop in October as demand for durable goods continues to slump.

The National Association of Realtors (NAR) reported its Pending Home Sales Index fell 4 percent in November to 82.3, marking the lowest reading since the index began in 2001.

The Institute for Supply Management (ISM) said Tuesday its service sector index rose 3.3 percent to 40.6 in December, well ahead of market expectations. The increase breaks a four-month streak of decline for the index.

Wednesday's market will see the release of crude oil inventories for the week ended Jan. 2.