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Stocks Edge Up on Strong New Home Sales Report

<p>Stocks rise modestly following positive data showing new home sales in January hit their highest level in more than five years.</p><p></p>
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Stocks eked out small gains on Wednesday in volatile trading after strong new home sales data.

The Dow Jones Industrial Average closed unofficially was 18 points higher and the S&P 500 and the Nasdaq also ticked higher. The Russell 2000 index of smaller cap stocks hit a new high of 1,183.04, topping its previous all-time record of 1,182.04 reached in mid-January

Stocks were higher for most of the session, lifted by encouraging news on the housing front. New home sales spiked 9.6 percent in January, jumping to a 5-1/2 year high, to a seasonally adjusted annual rate of 468,000 units, according to the Commerce Department. Economists polled by Reuters had forecast new home sales falling to a 400,000-unit pace.

Earlier, weekly mortgage applications fell to their lowest level in nearly two decades, according to the Mortgage Bankers Association, pointing to weakness in buyer demand heading into the usually-busy spring housing season.

Meanwhile, Boston Federal Reserve Bank President Eric Rosengren said the recent drop in the unemployment rate overstates the health of the labor market and should not trigger any speedy reduction in the central bank's easy monetary policy.

Fed Chair Janet Yellen is scheduled to testify before the Senate Banking Committee on Thursday, in her second testimony before Congress this month.

Among earnings, Target shares gained 3 percent after the retailer edged past Wall Street expectations, even though the company said the December data breach shaved two cents a share off its earnings and hit sales badly.