Markets Rally Despite Data

FOX Business: The Power to Prosper

Stocks closed solidly higher as traders cheered encouraging corporate news and shrugged off downbeat economic data and rising oil prices.

Today's Markets

The Dow Jones Industrial Average gained 81.1 points, or 0.67%, to 12,279, the S&P 500 was up 9.3 points, or 0.71%, to 1,319 and the Nasdaq Composite climbed 26.2 points, or 0.96%, to 2,757. The FOX 50 gained 4.5 points to 926.

"The markets at this point are digesting a lot of what’s going on" around the world, said Cameron Short, a senior vice president at Stifel Nicolaus.

The telecom sector led gains, with companies like AT&T (NYSE:T) and Verizon Communications (NYSE:VZ) jumping.

Mergers and acquisitions activity has been on the rise in recent weeks following AT&T's bid to acquire T-Mobile for $39 billion.  General Electric (NYSE:GE) said Tuesday it plans on acquiring about 90% of Converteam for about $3.2 billion.  The conglomerate hopes Converteam will provide a boost for to its electricity solutions division.

Oil prices, which have surged over the last two months amid concerns about potential supply disruptions from turmoil in the Middle East and North Africa, remain volatile.

Light, sweet crude settled higher by 81 cents, or 0.78%, to $104.79. Oil pared steep losses on news the unrest in Syria is escalating.  Indeed, the Syrian cabinet resigned amid the political tumult.

Meanwhile, the price of gas at the pump continues climbing.  A gallon of regular gas costs $3.59 on average nationwide, up from $3.35 last month and $2.80 last year, according to the AAA Fuel Gauge report.

On the economic front, home prices across the U.S. slid a seasonally adjusted 0.2% in January from December -- the biggest drop in 11 years -- according to the S&P/Case-Shiller index. Economists forecast a loss of  0.4% for January. Washington was the only one of twenty metropolitan areas the report surveys that gained in January.

Homebuilders like Lennar (NYSE:LEN) and D.R. Holton (NYSE:DHI) slid after the report was released.

While the report is a lagging indicator, other recent data have suggested home inventory remains historically high, potentially putting pressure on home prices.

"The unwinding of the softness in home prices following the expiration of government stimulus last year has largely run its course," wrote Michael Gapen, an economist with Barclays Capital, in a research note.

Regulators are mulling restrictions in the mortgage market that could force banks to retain a certain amount of risk when securitizing a loan, according to a proposal obtained by FOX Business.

Securitization is when lenders break up a loan and sell it on financial markets. It is a very useful tool for banks since it helps spread out risk, making it easier to lend, but proved problematic during the financial crisis because it became very difficult to gauge the strength of underlying assets as home prices collapsed in 2008.

While increased regulation in that sector could provide some level of protection from future financial crises, it could also slow recovery in the housing market that relies on mortgages.

The proposed regulations "could have a really chilling effect on the market’s ability to come back,” said Michael Bizenov, executive vice president at Sterling National Bank.

Consumer confidence dropped from 72 in February to 63.4 in March, according to a report by the Conference Board. Analysts expected a reading of 65 for March.  Confidence has been slammed by rising energy and food prices.

These data could affect consumer-driven stocks like Wal-Mart (NYSE:WMT) and Lowe's (NYSE:LOW).

In currencies, the euro edged 0.04% higher against the U.S. dollar as traders weighed concerns about Portugal's sovereign debt against the potential for the European Central Bank [ECB] to raise interest rates.  If the ECB raised rates, it would be more desirable to keep money in European banks, hence boosting demand for the euro and the exchange rate.

Gold was lower by $3.80, or 0.27%, to $1418.

Corporate News

Amazon.com (NASDAQ:AMZN) announced its latest foray into cloud computing. Amazon's Cloud Service enables users to store their music collections online and access them from computers and smartphones.

Apollo Group (NYSE:APOL) shares tumbled after the private education provider said it swung to a fiscal-second quarter loss of 45 cents a share and new enrollment at its University of Phoenix plummeted 45%.

Nokia (NYSE:NOK) is suing Apple (NASDAQ:AAPL), saying the iPad-maker infringed on its patents "in virtually all of its products."

Wal-Mart (NYSE:WMT) is expected to defend itself in at the Supreme Court Tuesday.  A gender discrimination lawsuit that alleges the retail-behemoth paid women less than their male colleagues and gave women fewer chances for advancement is attempting to gain class-action status.  If successful, it could turn into one of the biggest gender discrimination cases because of the number of possible plaintiffs.

A.C. Moore Arts & Crafts (NASDAQ:ACMR) revealed a 20 cent per share net loss in its fiscal fourth quarter, besting analysts' expectations for a loss of 23 cents. The crafts company was hit by contracting margins and same-store-sales losses.

Google's (NASDAQ:GOOG) Android smartphone operating system is poised to become the largest mobile operating system by market share in 2011, according to a report by International Data Group.

Foreign Markets

In Europe, Portugal's cost of borrowing continues rising, increasing chances the Eurozone country could need a bailout, putting pressure on the markets. The English FTSE 100 gained 0.47% to 5,932, the French CAC 40 rose 0.27% to 3,987 and the German DAX was off 0.06% to 6,934.

Asian stocks were largely in the red as well.  The Japanese Nikkei 225 was down 0.21% to 9,459 and the Chinese Hang Seng dipped 0.03% to 23,060.