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Encouraging economic readings on housing and factory orders combined to lift the markets into the green for the second consecutive day. Investors did keep in mind lingering euro-zone debt woes ahead of the European Summit, but domestic sentiment and the strength in energy shares overshadowed cross-Atlantic worries.

The Dow Jones Industrial Average (DJI) gained 0.7% and was up to 12,627.01. The Standard & Poor 500 (S&P 500) surged 0.9% and finished yesterday’s trading session at 1,331.85. The tech-laden Nasdaq Composite Index settled 0.7% or 21.26 points higher at 2,875.32. The fear-gauge CBOE Volatility Index (VIX) moved marginally lower, by 1.4% to settle at 19.45. Total volumes on the New York Stock Exchange were 3.29 billion shares. Advancers outpaced the decliners on the NYSE; as for 76% stocks that gained, 21% stocks closed lower.

For the second time in a row benchmarks ended in the green, thanks to positive domestic economic data. The National Association of Realtors came out with data on pending home sales, which matched the highest level recorded over the last two years. According to the report, the Pending Home Sales Index jumped to 101.1 in May, up 5.9% from 95.5 in April. This was also 13.3% higher than the year-ago level of 89.2 and the rate of increase far outpaced consensus expectations of a jump of 1.8%. Lawrence Yun, NAR chief economist, sounded positive on the housing sector saying: “The housing market is clearly superior this year compared with the past four years.  The latest increase in home contract signings marks 13 consecutive months of year-over-year gains.” “Actual closings for existing-home sales have been notably higher since the beginning of the year and we’re on track to see a 9 to 10 percent improvement in total sales for 2012,” he added.

Buoyed by the positive data, SPDR S&P Homebuilders (XHB) jumped 1.8% and stocks including Lennar Corp. (NYSE:LEN), PulteGroup, Inc. (NYSE:PHM), KB Home (NYSE:KBH), Toll Brothers Inc. (NYSE:TOL), DR Horton Inc. (NYSE:DHI), Hovnanian Enterprises Inc. (NYSE:HOV) and Beazer Homes USA Inc. (NYSE:BZH) gained 4.8%, 1.7%, 3.0%, 3.9%, 2.3%, 5.2% and 4.4%, respectively.

Meanwhile, the U.S. Department of Commerce also reported positive factory order numbers. According to a report by the U.S. Census Bureau, new orders for manufactured durable goods jumped 1.1% or $2.3 billion in May to $217.2 billion. The upside in new orders came after two back-to-back months of declines and also outpaced consensus estimates of an increase of just 0.3%.

Separately, an uptick in oil prices helped energy shares clock up gains. Posting a strong performance, the Energy Select Sector SPDR (XLE) jumped 2.0% and stocks such as Chevron Corporation (NYSE:CVX), Nabors Industries Ltd. (NYSE:NBR), NRG Energy Inc (NYSE:NRG), Cabot Oil & Gas Corporation (NYSE:COG), Berry Petroleum Company (NYSE:BRY) and Tesoro Corporation (NYSE:TSO) soared by 1.6%, 5.6%, 6.0%, 9.0%, 8.2% and 2.0%, respectively.

Luckily, there were no major headlines from the other side of the pond that could dent the positive sentiment. Investors did keep in mind lingering woes in the Euro-zone ahead of the European Summit that commences on Thursday. Meanwhile, German Chancellor was reported to have warned that there might not be any immediate fix for the “structural measures.” She said: "I fear that at [the summit] there will again be far too much talk about all possible ideas for common liability and far too little about better controls and structural measures".

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