US STOCKS-Wall St rebounds as gold recovers, data signals strength

Tue Apr 16, 2013 10:07am EDT

* Gold prices rebound after selloff

* Consumer prices decline, housing starts rise

* Coca-Cola lifts Dow after earnings, territory deal

* Indexes up: Dow 0.79 pct, S&P 0.82 pct, Nasdaq 0.80 pct

By Chuck Mikolajczak

NEW YORK, April 16 (Reuters) - U.S. stocks rose on Tuesday after the worst decline since November in the prior session as gold's price made a modest recovery and government data on inflation and housing signaled an improving economy.

Spot gold gained 2.8 percent as the market tried to steady after the precious metal recorded its biggest ever daily drop in dollar terms in the prior session. But even as physical buyers seized on the lower prices, investors remained jittery about further declines.

U.S.-listed shares of gold miners Barrick Gold and Randgold Resources rebounded along with the precious metal. Barrick rose 3.6 percent to $20.50 and Randgold climbed 4.5 percent to $72.17. The PHLX Gold/Silver index advanced 3 percent.

U.S. stocks posted their worst day since Nov. 7 on Monday as big declines in the price of gold, oil and other commodities fed a broad selloff in equities. Stocks fell further after two fatal explosions near the finish of the Boston Marathon.

Government economic data, which has shown some weakness recently, was a positive force on Tuesday. The cost of living went down in March as the consumer price index slipped 0.2 percent, while starts at building sites for homes rose to the highest level since June 2008.

The data added to evidence of a healthier housing market, which is critical to the economy.

"The big thing dragging down stocks yesterday was really the sharp decline in gold and you see that lifting here a bit," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

"You see a nice strong housing starts number today and that certainly is providing an additional lift to the market."

The Dow Jones industrial average gained 115.30 points, or 0.79 percent, to 14,714.50. The Standard & Poor's 500 Index climbed 12.70 points, or 0.82 percent, to 1,565.06. The Nasdaq Composite Index rose 25.79 points, or 0.80 percent, to 3,242.28.

The PHLX housing sector index gained 2.6 percent, led by a 3.4 percent rise in Lennar Corp to $39.05.

Other data showed industrial production grew 0.4 percent last month, topping expectations of a 0.2 percent rise, while capacity utilization, rose to 78.5 percent in March from 78.3 percent in February.

Investors also digested a flurry of earnings reports. Coca-Cola Co gained 4 percent to $41.69 as the biggest boost to the Dow after the soft drink company posted first-quarter earnings and announced a deal to sell some territory held by its company-owned bottling system.

Fellow Dow component Johnson & Johnson added 0.7 percent to $82.25 after the diversified healthcare company reported better-than-expected first-quarter earnings.

Goldman Sachs reported a stronger-than-expected rise in quarterly profit as it earned more from underwriting fees and its own investments, but shares dipped 1 percent to $144.96.

Target Corp shed 0.4 percent to $68.17 after the retailer warned first-quarter earnings would miss expectations after weaker-than-expected sales of seasonal and other items.

Intel Corp and Yahoo Inc are scheduled to post earnings after the close.

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