Market Commentary and Intraday News
Jump in housing starts, earnings sends stocks up
308 days ago
By BERNARD CONDON
AP Business Writer
(AP:NEW YORK) The latest signs of recovery in the housing market and strong earnings reports from a handful of big companies sent stocks higher Wednesday.
The Dow Jones industrial average rose 90 points to 12,896 in late afternoon trading. The Dow has had a miserable July so far, marking only its third gain for the month on Tuesday.
"Many of the risks _ an anemic European economy, a slowdown in Asia _ have been factored into earnings expectations," said Talley Leger, investment strategist at Macro Vision Research, an investment consulting firm. "That's why we're seeing positive surprises."
The government reported that builders broke ground last month on the most new homes and apartments in nearly four years. The 6.9 percent jump brought the number of housing starts to the highest since October 2008. The news came a day after a gauge of confidence among U.S. homebuilders jumped to the highest level in five years.
The Standard & Poor's 500 index rose seven points to 1,371. Amphenol jumped 14 percent, the most in the index, after the maker of electronic cables and connectors reported second-quarter earnings that were higher than analysts were expecting. Amphenol's stock was up $7.46 at $58.82.
A big gain by Intel following its earnings report drove up technology stocks, especially other chip makers. Those companies, plus industrials, were responsible for much of the market's gains. The Nasdaq composite climbed 28 points to 2,938.
Other earnings reports weren't as strong. Bank of America reported income that beat most analysts' expectations for the second quarter, but its revenue fell short. The stock fell 33 cents to $6.59. Profit declined for PNC Financial Services Group and the investment manager BlackRock. PNC fell 61 cents to $60.98 and BlackRock fell $1.38 to $174.77.
After the market closed Tuesday, Intel said earnings came in ahead of analysts' estimates. Its stock was up 81 cents, or 3 percent, at $26.19. Texas Instruments and Qualcomm, which reports earnings after the closing bell Wednesday, both rose more than 2 percent.
For more than a month, big companies have been talking down prospects for big jumps in earnings, and Wall Street analysts have slashed their expectations in response. At the start of the earnings season last week, they expected earnings for companies in the S&P 500 to fall 2 percent, according to S&P Capital IQ. That would be the first drop in nearly three years.
But so far, several companies have delivered pleasant surprises. Honeywell International, a big technology and manufacturing company, reported an 11 percent increase in second-quarter income Wednesday, more than Wall Street was expecting, thanks to higher demand for its products. Honeywell also raised its forecast for full-year profits. Honeywell's stock jumped $3.54 to $58.08.
Of the 65 companies in the S&P 500 to report earnings so far, 43 have beat estimates, or 66 percent, according to S&P Capital IQ. That is slightly higher than the 62 percent average for most quarters.
In addition to Qualcomm, a host of companies report earnings after the close, including IBM, eBay, American Express and Yum Brands, owner of Taco Bell, KFC and Pizza Hut.
Among the biggest gainers Wednesday was Vivus Inc., a drug maker. It rose 10 percent after announcing it got approval from regulators to sell a new weight-loss pill. Doctors consider the pill, Qsymia, the most effective of a new generation of anti-obesity drugs. The company plans to start selling it by the end of the year.
Madison Square Garden's stock lost 1 percent after the owner of the New York Knicks NBA team confirmed that it was losing star player Jeremy Lin to the Houston Rockets. The Knicks said they wouldn't match a three-year, $25 million offer for the player. MSG's stock fell 46 cents to $35.35.
In addition to housing news, the Federal Reserve said Wednesday that its Beige Book survey of the economy across the country showed modest expansion in June and early July, but that growth and hiring slowed in several regions.
In his second day of testimony before Congress, Federal Reserve Chairman Ben Bernanke did not signal any new stimulus is imminent, though he did say the Fed was looking at "ways to address the weakness in the economy should more action be needed to promote a sustained recovery in the labor market."
Treasurys prices rose slightly as demand for low-risk assets remained strong. The yield on the benchmark 10-year Treasury note fell to 1.49 percent from 1.50 percent late Tuesday. Germany auctioned $6.14 billion in two-year treasury notes Wednesday with an average interest rate, or yield, of minus 0.06 percent.
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.