“The number of new homes sprouting around us is…is…it’s overwhelming”
Dow: 13,557, +5 (+0.04%) S&P 500: 1,461, +6 (+0.41%)
Hofstra University is primarily known outside the confines of Nassau County for 3 things: lacrosse players, calf tats, and lacrosse players with calf tats. But during last night’s debate, the beautiful “island” campus was almost the site of the 1st ever presidential brawl (that thing got heated). Hofstra’s also on the map for producing New York Jet Wayne Chrebet. The fabled wide receiver now works as a Financial Advisor at Barclays and we’re pretty sure he’s been enjoying the stock market’s rally this week. And the stock bullishness continued today: Tuesday evening’s earnings from big boys IBM and Intel had stocks down early – but 2 strong readings on the US housing market helped the Dow eke out a 5 point gain for its 4th straight win.
Housing starts & housing permits significantly increase
It takes 2 to tango. Construction on new homes rocketed last month to its highest level in 4 years and new building permits (a sign of future construction) rose more than expected in September. More specifically, workers broke ground on 872,000 new homes after Labor Day (no more summer BBQs distractions), led by multi-family residences, and requests to build more increased by 11%. Looking at the recently improving trend in housing data (like homebuilder confidence & increased sales), economists are seeing the housing market take the lead in the American economic recovery as manufacturing slows from weakening European and Asian demand. It’s also a sign that the Federal Reserve‘s stimulus policy of keeping lending interest rates low to encourage borrowing is working, as more folks take out mortgages to purchase homes (even if MTV Cribs is no longer on-air). Homebuilders PulteGroup (PHM) and KB Home (KBH) jump over 5% each on the news.
IBM and Intel report weak earnings on struggling sales
The markets have been gaining this week thanks to surprisingly good earnings reports from firms like Citi, Johnson & Johnson and even Domino’s. Until now. Tech giants IBM (IBM) and Intel (INTC) both issued disappointing earnings reports after the market closed on Tuesday and investors were able to react today. IBM shares lost nearly 5% after the firm saw its hardware sales drop and Intel stock dropped 2.5% as personal computer sales also took a serious hit (just make something shiny and clean like Apple already). While Bank of America (BAC) as well announced earnings (which matched forecasts), investors were more focused on the tech twins. Analysts have had low expectations for this 3rd quarter earnings season that kicked off last week, but have been pleasantly surprised by overall strong performances from America’s corporations – the question now is whether today’s news (like A-Rod’s hit in the MLB playoffs on Sunday) is just an anomaly.
Tomorrow:
- Your weekly serving of Weekly Jobless Claims
- The 2-day meeting of European leaders to figure out a solution to their debt crisis (again) begins
- More earnings, baby…McDonald’s, General Electric, Microsoft, Morgan Stanley
© 2012 MarketSnacks
