US stocks were on the move after days of backpedalling, with home builders leading the way on strong earnings from Lennar and data that showed continued growth in the US housing market.

Earnings that beat expectations helped Lennar rise 0.7 per cent to $35.23 on Tuesday, while data showed new US home sales were at the highest level in almost five years and US house prices continued to rise.

That helped the Standard & Poor’s Supercomposite Home Builders index to rise 1.1 per cent. The index had recently been nearing bear market territory.

Lennar has more than doubled its share price in the past two years as the US housing market has improved, but it tumbled recently along with the broader market.

Rising US Treasury rates have caused concern about higher mortgage costs limiting the resurgent US housing market.

Other homebuilders also benefited. PulteGroup advanced 3.9 per cent to $19.02, Taylor Morrison Home rose 2 per cent to $24.53 and Standard Pacific added 1.6 per cent to $8.10.

The S&P 500 rose 1 per cent to 1,588.03 and the Dow Jones Industrial Average added 0.7 per cent to 14,760.31, with both indices helped by strong performances from some of the largest US banks.

Citigroup added 3.4 per cent to $47.00, JPMorgan ticked up 2.3 per cent to $52.08 and Bank of America rose 3 per cent to $12.67.

Telecoms also performed well, with AT&T rising 1.7 per cent to $35.03, Verizon Communications adding 2.7 per cent to $50.44 and Sprint Nextel advancing 0.3 per cent to $6.88.

The Nasdaq gained 0.8 per cent to 3,347.89.

The morning rally provided a breather after three days of aggressive selling that began after the US Federal Reserve and its chairman Ben Bernanke said the quantitative easing programme would be scaled back if economic indicators stayed on track.

However, recent guidance issued by numerous companies has pointed to a difficult road ahead. That has led to a sell-off which has been particularly hard on cyclical sectors and companies with exposure to commodities and China.

“There’s some serious doubts about whether or not the economy is strong enough to produce a meaningful expansion in [corporate] profits,” said Carmine Grigoli, chief investment strategist at Mizuho Securities USA.

“If anything, the signs that you’re seeing in the equity market today are pointing not to stronger growth, but weaker growth. The weakness that you’re seeing in some of the sectors of the stock market are indicative of weaker economic growth that we’re seeing overseas, particularly in China,” he added.

Those sentiments were echoed by disappointing earnings from Walgreens and Barnes & Noble.

Walgreens dropped 5.9 per cent to $45.22 after reporting revenue and earnings per share that missed expectations.

Barnes & Noble announced that it was ending the production of colour tablets and looking for a partner to take over manufacturing, as sales in its Nook ereader fell 34 per cent. Shares in the company fell 17.1 per cent to $15.61.

Pearson, owner of the Financial Times, has a 5 per cent stake in the Nook division.

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