U.S stocks rally on housing data, earnings; Dow gains 1.08%

Investing.com - U.S. stocks rallied on Tuesday after housing data rekindled hopes that more sustained economic recovery is in store for the U.S. economy.

At the close of U.S. trading, the Dow Jones Industrial Average finished up 1.08%, the S&P 500 index rose 1.43%, while the Nasdaq Composite index rose 1.50%.

Stocks fell on Monday after Chinese first-quarter GDP and industrial output data missed expectations, though bottom fishers jumped into the market on Tuesday and snapped up nicely priced shares that brought up broader indices.

Economic indicators released earlier Tuesday also brought in bargain hunters, especially data on housing starts.

The Census Bureau reported earlier that building permits rose by 902,000 in March, less than market calls for 940,000 increase and also below the 968,000-unit rise in February.

However, housing starts rose by 1.036 million units last month, beating market forecasts for an increase of 930,000 after a rise of 968,000 in February, which fueled appetite for risk.

Separate government data revealed that consumer inflation dipped in March due in part to falling fuel prices.

The U.S. Bureau of Labor Statistics reported earlier Tuesday that the country's consumer price index fell 0.2% in March after rising 0.7% in February, missing expectations for a 0.1% gain.

Separately, the U.S. core CPI, which is stripped of volatile food and energy costs, rose 0.1% in March, missing expectations for a 0.2% increase after a 0.2% rise the previous month.

In addition, the Federal Reserve reported that U.S. industrial production rose 0.4% in March, beating expectations for a 0.2% gain after a 1.1% increase the previous month, which gave investors reason to abandon the safe-haven dollar and go long on stocks.

Earnings fueled the rally as well, with Coca-Cola and Johnson & Johnson beating expectations.

Leading Dow Jones Industrial Average performers included Coca-Cola, up 5.66%, Walt Disney, up 3.04%, and Bank of America, up 2.59%.

The Dow Jones Industrial Average's worst performers included Verizon Communications, down 0.34%, AT&T, up 0.03%, and Boeing, up 0.14%.

European indices, meanwhile, finished lower.

After the close of European trade, the EURO STOXX 50 fell 0.59%, France's CAC 40 fell 0.67%, while Germany's DAX 30 finished down 0.39%. Meanwhile, in the U.K. the FTSE 100 fell 0.62%.

On Tuesday, the U.S. will release industry data on mortgage applications as well as official data on oil inventories.

The Federal Reserve will release its Beige Book survey.