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Stocks rebound on home prices, earnings

AP Business Writers

NEW YORK – The stock market bounced back Tuesday following a surge in U.S. home prices and signs of recovery in Europe’s economy. Strong earnings also helped power gains.

The Dow Jones industrial average ended the day 99.22 points higher at 13,979.30, erasing a large part of its loss from Monday. The index traded above 14,000 during the day before falling back in the last hour.

The Standard & Poor’s 500 gained 15.59 points to 1,511.29. The Nasdaq composite was up 40.41 points to 3,171.58.

The rise came after two days of whiplash. On Monday, the Dow dropped 129 points, its worst sell-off of the year so far, as fears about Europe’s finances resurfaced. The Dow is now 185 points below the record high of 14,164 it reached on Oct. 9, 2007.

After strong gains for stocks this year, investors are wondering whether they should sell now, or wait and see if the rally still has legs, said Brad Reynolds, chief investment officer at LJPR Inc.

“The market is extremely skittish right now, that’s why we’re seeing such big moves,” Reynolds said.

Tuesday’s advance was driven by new data showing that U.S. home prices rose in December at the fastest pace in more than six years. CoreLogic, a real estate data provider, reported that home prices rose 8.3 percent. In Europe, a measure of manufacturing and service businesses rose to a 10-month high in January.

Disney won over more fans on Wall Street with its latest quarterly performance, despite a slight drop in its earnings.

The downturn announced Tuesday was less pronounced than the modest dip analysts anticipated as Walt Disney Co. digested higher programming costs at its ESPN television network and dealt with a less appealing lineup of home video releases in its movie studio. Higher expenses for distributing box-office hits such as “Lincoln” and “Wreck-It-Ralph” also created a drag during the holiday-season quarter.

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