Stocks extend gains as pending home sales rise

NEW YORK (AP) — Investors are gently adding to their gains a day after rushing into the stock market.

The advance on Tuesday at times pushed the Dow Jones industrial average into the black for 2009. The blue chips had been down by as much as 25.4 percent in early March.

The modest gains reflect caution after huge gains on Monday that followed a series of upbeat economic data. A report Tuesday showing pending U.S. home sales logged the biggest monthly jump in nearly eight years in April added to investors' confidence about the economy.

Better-than-anticipated data on manufacturing, consumer spending and construction spending sent the Dow and other major indexes up more than 2 percent on Monday. Both the Standard & Poor's 500 and Nasdaq composite indexes rose to their highest levels this year.

In midmorning trading, the Dow Jones industrial average rose 42.67, or 0.5 percent, to 8,764.11. The Dow at times traded above 8,776.39, its finish for 2008.

The broader Standard & Poor's 500 index rose 4.57, or 0.5 percent, to 947.44, and the Nasdaq composite index rose 11.88, or 0.7 percent, to 1,840.56.

Financial stocks fell after several banks announced plans to raise capital to help repay federal bailout funds.

Morgan Stanley said it will raise $2.2 billion in common stock offering, after JPMorgan Chase & Co. and American Express Co. announced similar plans late Monday. JPMorgan will offer $5 billion of common stock, while American Express is seeking to raise $500 million.

Meanwhile, Goldman Sachs Group Inc. has sold part of its stake in Industrial & Commercial Bank of China to raise more than $1.9 billion to help repay bailout money.

Banks not required by the government to raise additional capital that want to repay bailout funds must first prove they can raise money without relying on guarantees against losses provided by the Federal Deposit Insurance Corp.

Investors will also be watching reports due later Tuesday on auto sales to see how much the drama of bankruptcies by Chrysler LLC and General Motors Corp., which formally filed for Chapter 11 protection Monday, has been affecting the already badly slumping demand for new cars.

Copyright 2009 The Associated Press.