Housing Data, Fed Hopes Buoy Stocks

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Includes: DIA, QQQ, SPY
by: Midnight Trader
  • Dow Jones Industrial Average up 103.16 (+0.81%) to 12,908.70
  • S&P 500 up 9.11 (+0.67%) to 1,372.78
  • Nasdaq Composite Index up 32.56 (+1.12%) to 2,942.60

GLOBAL SENTIMENT

  • Hang Seng Index down 1.11%
  • Shanghai China Composite Index up 0.37%
  • FTSE 100 Index up 1.01%

U.S. stocks ended higher, propelled by strong earnings by several large bank and technology companies as well as continued hopes for more stimulus from the Federal Reserve. The markets also drew support from new data showing another rise in housing starts last month. Shares of consumer staple companies were one of the bigger drags on prices today, with financial stocks also reversing course to finish with a loss. Commodities were mixed.

Fed Chairman Ben Bernanke completed the second of two days of Congressional testimony, telling the U.S. House Financial Services Committee that the central bank was ready to act should the U.S. recovery sputter. "The U.S. economy has continued to recover, but economic activity appears to have decelerated somewhat during the first half of this year," he said, adding the Fed is "prepared to take further action as appropriate to promote a stronger recovery."

In its Beige Book survey of business conditions around the country, the Federal Reserve said the economy expanded at a "modest to moderate" pace in June and early July, although retail sales and manufacturing showed some signs of cooling in some regions. It also found a slow expansion in manufacturing, while saying employment levels have "improved at a tepid pace.

The Atlanta, St. Louis and San Francisco districts were described as having "modest growth," while Boston, Chicago, Minneapolis, Kansas City, and Dallas were "advancing moderately."

Also today, the Commerce Department said housing starts rose 6.9% last month to a 760,000 annual pace, its fastest pace in nearly four years and up from a revised 711,000 rate in May that was faster than initially estimated. Experts surveyed by Bloomberg News were expecting a 745,000 rate for June.

Tech stocks rose, picking up strength after Intel Corp (NASDAQ:INTC) posted Q2 earnings last night that beat expectations. EPS was $0.54, $0.02 better than analysts had forecast, while sales rose 3.8% to $13.5 billion, roughly in-line with Wall Street. But the chip-maker also tempered its Q3 and FY12 sales outlook, citing a "more challenging macroeconomic environment.

Bank stocks also enjoyed initial gains following better-than-expected results at U.S. Bancorp (NYSE:USB) and Bank of America (NYSE:BAC). USB earnings of $0.71 a share beat by $0.01, helping lift the stock to near 52-week high in early trade. BAC topped estimates by $0.05, turning in Q1 EPS of $0.19, although revenues were just shy of the $22.87 billion consensus.

Commodities were mixed. Crude oil for August delivery rose $0.82 to settle at $89.89 a barrel, while August natural gas rose $0.17 to $2.97 per 1 million BTU. August gold fell $18.50 to $1570.70 an ounce, with September silver falling $0.26 to $27.08. September copper added $0.01 to $3.47.

UPSIDE MOVERS

(+) GALE, Receives U.S. patent for breast cancer vaccine

(+) APH, Raised FY12 earnings and revenue outlook; sees EPS of $3.38 to $3.44, up from $0.08 a share from prior forecast

(+) GWW, Q2 profit jumps to $2.63 a share, a penny better than the Street view, while sales rise 12% to $2.25 billion

(+) KOS, Deepwater exploraton well off Ghana coast intersects 13 meters of oil pay and 20 meters of gas condensate pay

DOWNSIDE MOVERS

(-) ROVI, Warns adjusted Q2 earnings will be in range of $0.35 to $0.38 a share; analysts were projecting 57 cents

(-) SBH, Preliminary Q3 profit beats by $0.01, but $887 million in sales is $13 million under forecasts; CDR Investors move to sell entire 23.1 million-share stake in firm

(-) HHS, Sees Q2 EPS of $0.10 to $0.12, ex impairment charges, on $195 million to $205 million in sales; Wall Street was expecting $0.16 a share profit and $208.9 million in sales

(-) COF, Agrees to pay $210 million to resolve charges its vendors misled customers into paying for extra credit card products