NEW YORK — You know things have changed on Wall Street when the housing industry saves the day.
A surprise government report that home construction picked up in February caught traders off guard and injected a week-old stock market rally with new energy Tuesday.
Stocks of homebuilders and banks jumped as bullish investors saw yet another sign that the deeply troubled economy was beginning to show signs of stabilizing.
Tuesday's rally, which picked up momentum as the day went on, wound up pushing the Dow Jones industrial average up 179 points, or 2.5 percent and the broader Standard & Poor's 500 index up more than 3 percent. It was the market's fifth gain over the past six trading days.
The housing report was the latest checkmark in a growing list of upbeat news. Traders began reconsidering their dire view of the economy early last week when Citigroup Inc. said it had generated a profit in the first two months of the year.
Other troubled banks handed out similarly upbeat assessments, followed by encouraging reports on key measures of the economy's health such as retail sales.
Since the rally began last week, the Dow is up 849 points, or 13 percent. That's the kind of percentage gain that might normally take a year to assemble.
The market has established a clear shift in tone over the past week. Jittery traders had blown apart earlier rallies this year by selling just as stocks managed to advance. A 20 percent gain from late November until the start of the year vanished as worries grew about the tattered balance sheets at large banks and signs that consumers will pulling back on their spending.
For the first time in months, traders are starting to allow themselves to think that this past week's rally could be the one that sticks.
"I'd say it's very encouraging, maybe even sustainable," said Randy Bateman, chief investment officer at Huntington Funds, in Columbus, Ohio.
Traders didn't appear to be at all nervous as they awaited the outcome of a two-day meeting of the Federal Reserve's interest rate committee that ends Wednesday. The central bank is widely expected to leave rates at their current historically low level, but the market will be keen to see how the Fed sizes up the economy in its statement that accompanies the decision on rates.
The Dow rose 178.73, or 2.5 percent, to 7,395.70 after falling modestly on Monday.
Broader stock indicators also showed big gains. The S&P 500 index rose 24.23, or 3.2 percent, to 778.12, while the Nasdaq composite index rose 58.09, or 4.1 percent, to 1,462.11.
The Russell 2000 index of smaller companies rose 17.23, or 4.5 percent, to 403.59.
Four stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 6 billion shares, compared with 7.6 billion shares traded Monday.
Brett D'Arcy, chief investment officer at CBIZ Wealth Management, said the market's measured moves are a healthy sign because it means traders aren't simply trying to grab quick profits.
Investors embraced the data on home construction that came in well above what economists forecast. Building permit applications, a key measure of future activity, also rose unexpectedly.
Tim Courtney, the chief investment officer at Burns Advisory Group, said the report was encouraging. "We could be in the very early stages of some kind of normalization" in housing, he said.
The housing report sent homebuilder stocks higher. Pulte Homes Inc. rose 64 cents, or 6.7 percent, to $10.16, while Lennar Corp. jumped 68 cents, or 8.7 percent, to $8.52. Toll Brothers Inc. advanced 95 cents, or 5.9 percent, to $17.06.
Stocks of home-supply retailers including Home Depot Inc. and Lowe's Cos. rose more than 6 percent.
Financial shares, which led the rally last week, put up big gains again Tuesday. Banks have been hit hard by souring mortgage debt, and any pickup in housing could help their balance sheets.
Citigroup rose 18 cents, or 7.7 percent, to $2.51, nearly two weeks after falling below $1. PNC Financial Services Group Inc. rose $1.19, or 4.4 percent, to $28.51, and JPMorgan Chase & Co. rose $2.05, or 8.9 percent, to $25.14.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.01 percent from 2.96 percent late Monday. The yield on the three-month T-bill, considered one of the safest investments, slipped to 0.22 percent from 0.23 percent.
The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude rose $1.81 to settle at $49.16 a barrel on the New York Mercantile Exchange.
Overseas, Britain's FTSE 100 fell 0.2 percent, Germany's DAX index fell 1.4 percent, and France's CAC-40 slid 0.9 percent. Japan's Nikkei stock jumped 3.2 percent.