* Strong data may boost odds Fed will reduce stimulus
* Builders rally after Lennar results, data
* Walgreen slips after earnings, Netflix down on downgrade
* Indexes up: Dow 0.7 pct, S&P 0.8 pct, Nasdaq 0.5 pct
By Ryan Vlastelica
NEW YORK, June 25 (Reuters) - U.S. stocks rose in a volatile session on Tuesday, swinging between strong and modest gains after better-than-expected economic data, but the positive data raised questions about the Federal Reserve’s stimulus efforts.
While off session highs, stocks partially recovered Monday’s losses, part of a sharp, downward trend that began after Fed Chairman Ben Bernanke said the Fed’s stimulus program may be scaled back this year if the economy improves. The S&P 500 last week posted its worst week since April.
Data on durable goods orders and new-home sales in May, and consumer confidence in June all topped analysts’ expectations. The April Case/Shiller report on home prices also was above forecasts.
“You would think that would be bullish since it shows the economy is improving on its own, but the Fed has us in a mentality where the good news is bad news,” said Donald Selkin, chief market strategist at National Securities in New York. “With the economy improving, there’s a risk of tapering, which caused rates to jump and stocks to come off their highs.”
Housing stocks were among the strongest of the day, surging on the data as well as Lennar Corp, which posted strong results that the company said pointed to a “solid housing recovery.” The stock rose 2.5 percent to $35.87 while peer homebuilder PulteGroup Inc was up 5.1 percent at $19.25. The PHLX housing sector index climbed 2.1 percent.
The Dow Jones industrial average was up 95.22 points, or 0.65 percent, at 14,754.78. The Standard & Poor’s 500 Index was up 11.58 points, or 0.74 percent, at 1,584.67. The Nasdaq Composite Index was up 16.45 points, or 0.50 percent, at 3,337.21.
While the S&P is up 11 percent thus far in 2013, the recent trend has been negative, with the benchmark index dropping below both its 14-day and 50-day moving averages, seen as signs of near-term market direction. It is down about 2.9 percent in June.
“The market trend has turned to the downside. It is now easier to sell rallies than to buy dips,” said Selkin, who helps oversee $3 billion in assets. “If we close lower today, that would be a big blow to the bulls.”
The S&P on Monday closed at its lowest level since April 22 after China’s central bank said the country’s banks need to do a better job of managing their cash and due to continued worries about a reduction in stimulus measures from the U.S. Federal Reserve.
On Tuesday, the People’s Bank of China said it would not press banks too hard in its efforts to curb easy credit and prevent a possible banking crisis. The comments contributed to early gains in the premarket session.
Carnival Corp jumped 4 percent to $34.54 after the cruise ship operator named a new chief executive and affirmed its full-year profit outlook.
On the downside, Walgreen Co slumped 6 percent to $45.17 as the worst performer on the S&P 500 after reporting weaker-than-expected results, citing slow front-end sales and a challenging economy. Peer drugstore CVS Caremark Corp fell 1 percent to $56.22.
Netflix Inc fell 3.3 percent to $208.48 after Bernstein downgraded the stock to “underperform.”
Barnes & Noble Inc tumbled 13.3 percent to $16.32 after the largest U.S. bookstore chain reported its quarterly net loss more than doubled.