US stocks rise sharply

A strong jump in November housing construction propelled stock prices to sharp gains on Wall Street today and fuelled investors’ hopes that the US economy is improving.

Better-than-expected earnings from electronics retailers Best Buy and Circuit City also contributed to the market’s advance. Combined with the housing report, the news improved investors’ outlook for the economy, two-thirds of which is comprised of consumer spending.

‘‘There are a lot of reasons to be optimistic,’’ said Thomas Lydon, president of Global Trends Investments in Newport Beach, California. Among them, he said, are the year’s 11 interest rate cuts and companies’ improved earnings results and projections.

The Dow closed up 106.42, or 1.1%, at 9,998.39. The Dow advanced 80 points Monday.

The broader market also advanced sharply. The Nasdaq rose 17.30, or 0.9%, to 2,004.75.

Throughout this month, the Dow and Nasdaq have traded just above and below 10,000 and 2,000 respectively, and until December had not risen above those marks since before the September 11 terror attacks.

Wall Street’s broadest measure, the Standard & Poor’s 500 index gained 8.56, or 0.8%, to 1,142.92.

Investors, who have been looking for evidence of an economic recovery, welcomed the Commerce Department’s report that housing construction rose 8.2% in November. The increase was bigger than analysts were expecting and brought housing starts to their highest level since July as builders bet that low mortgage rates would continue to attract buyers.

Home builders posted healthy gains, led by Lennar, which soared dlrs 2.75 to dlrs 44. Lennar said its fourth-quarter earnings estimates will exceed Wall Street’s forecast by 25%.

Other winners included Best Buy, which rose dlrs 3.55 to dlrs 72.55 on fiscal third-quarter earnings that were 40% higher than the same period last year and beat analysts’ expectations by a penny a share. Competitor Circuit City, which also posted better-than-expected profits, inched up 16 cents to dlrs 23.86.

Also on the upside, General Electric rose dlrs 1.42 to dlrs 39.72, having reaffirmed its fourth-quarter and 2001 earnings expectations. DuPont advanced dlrs 1.10 to dlrs 43.22 following an upgrade by Merrill Lynch.

In technology, IBM gained 86 cents to dlrs 122.20, while Ciena rose 56 cents to dlrs 15.47.

‘‘There are some great companies that are available at great discounts compared to where they were a year ago,’’ Lydon said.

Analysts said the buying was also attributable to the likelihood that companies will have an easy time posting improved profits over this year, which marked the worst profit decline since 1991.

‘‘The third and fourth quarters of next year are going to look better than this year there is an 80% certainty of that,’’ said Scott Bleier, chief investment strategist at Prime Charter Ltd.

The Dow is 21.4% above its low of 8,235.81. The Nasdaq is up nearly 41% from its low; the S&P 500, up 18.3%.

Still, the market will suffer periodic weakness as investors are reminded that the first two quarters of 2002 will be difficult for many companies, Bleier added.

Advancing issues outnumbered decliners slightly more than 3 to 2 on the New York Stock Exchange. Volume was heavy.

The Russell 2000 index, which tracks smaller company stocks, rose 5.54, or 1.2%, to 485.48.