NEW YORK (AP) — New hopes that a deal would be reached for Greece to avoid defaulting on its debts sent stocks higher Tuesday. The market gave up some of its gains following a surprise drop in U.S. consumer confidence.
The Dow Jones industrial average rose 70 points, or 0.6 percent, to 12,512 in midday trading. It had been up as many as 133 points earlier.
The Standard & Poor's 500 index rose 7 points, or 0.5 percent, to 1,338. The Nasdaq composite gained 16 points, or 0.6 percent, to 2,813. Crude oil and metals prices also rose.
The Conference Board reported that its monthly survey found that Americans are losing faith that the economy is improving. The surprisingly poor results were caused by worries about jobs and inflation. Economists had expected confidence to improve for a second straight month.
The weak report dented optimism among investors that Greece may be nearing a deal to get another package of financial aid from its neighbors in Europe. Germany may back off its push for an early restructuring of Greek bonds, a shift that would help Greece get more aid, according to a report from the Wall Street Journal. Many European banks hold Greek government bonds and could suffer losses if the country restructures its debt.
Fears that Greece may not receive its latest installment of emergency loans knocked stocks lower over the past month. The Dow Jones industrial average has dropped four straight weeks, its longest losing streak since February 2010. Investors worry that if Greece defaults it could cause traders to shun the debt of other weak European countries like Portugal and Spain, raising their borrowing costs and causing more havoc on world markets. Greece received a package of emergency loans a year ago but it has become clear in recent weeks that the country will still need more help.
Ashland Inc. rose 10.2 percent after saying it will buy Specialty Products Inc. for $3.2 billion in cash. It's the latest big purchase in the specialty chemicals industry. Earlier deals include Berkshire Hathaway Inc.'s $9 billion purchase of Lubrizol Corp., announced in March. Corporate dealmaking, along with strong earnings, helped propel stocks earlier in the year.
Canadian utility Fortis Inc. said Monday that it will buy Central Vermont Public Service Corp. for about $470 million in cash. Shares of Vermont's largest utility rose 41 percent Tuesday, their first day of trading since the announcement. U.S. markets were closed Monday for Memorial Day.
General Dynamics rose 4.4 percent after it said it received a $744 million contract to build two ships for the U.S. Navy.
Energy stocks rose along with the price of oil. Crude futures climbed $2 to top $102 per barrel. Cabot Oil & Gas Corp. rose 2.3 percent.
Investors mainly looked past another grim report on the U.S. housing market. Home prices in in 12 of the 20 cities tracked by the Standard & Poor's/Case-Shiller index dropped in March to the lowest levels since the housing bubble popped in 2006. "Home prices continue on their downward spiral with no relief in sight," said David Blitzer, chairman of the index committee at S&P Indices.
Oliver Pursche, president of Gary Goldberg Financial Services, said the report didn't hurt investors' confidence much because their expectations were so low for the U.S. housing market already.
"There's no shock factor there," Pursche said. "We knew it was going to be bad, and it is."
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