Positive housing data and a subsequent rally in the housing
shares carried the benchmarks back into the green after a day of
severe losses. Along with the strength in homebuilders, the
consumer discretionary sector also registered strong gains.
However, investor sentiment was not spared from the concerns
related to European debt woes.
The Dow Jones Industrial Average (DJI) edged up 0.3% and ended
at 12,534.67. The Standard & Poor 500 (S&P 500) gained 0.5%
and finished yesterday's trading session at 1,319.99. The
tech-laden Nasdaq Composite Index increased 0.6% to move up to
2,854.06. The fear-gauge CBOE Volatility Index (VIX) dropped 3.2%
to settle at 19.72. The Street was not too busy as consolidated
volumes on the New York Stock Exchange, the Nasdaq and the American
Stock Exchange were roughly 5.9 billion shares, lower than this
year's daily average of 6.82 billion shares. Advancing stocks had a
better than the decliners; as for nine stocks that gained, five
stocks moved lower.
Markets had opened in the green but soon lost all their gains to
move lower. At first it seemed it was another day that was to be
dominated by concerns from the other side of the Atlantic, housing
data came in at the right time to rescue the benchmarks. For the
first time since last autumn, U.S. home prices moved up and that
was reason enough to lift investors' mood. The S&P/Case-Shiller
Home Price Indices came in better than expected recording a 1.3%
increase in average home prices in the month of April for both the
10- and 20-City Composites.
Commenting on the data, David M. Blitzer, Chairman of the Index
Committee at S&P Indices said: "With April 2012 data, we
finally saw some rising home prices… On a monthly basis, 19 of the
20 MSAs and both Composites rose in April over March. Detroit was
the only city that saw prices fall, down 3.6%. In addition, 18 of
the 20 MSAs and both Composites saw better annual rates of return.
It has been a long time since we enjoyed such broad based
gains".
Following the report, the housing sector posted strong gains and
the SPDR S&P Homebuilders (XHB) jumped 2.2%. Among the stocks
that gained, PulteGroup, Inc. (NYSE:
PHM
), D.R. Horton, Inc. (NYSE:
DHI
), M/I Homes Inc (NYSE:
MHO
), Beazer Homes USA, Inc. (NYSE:
BZH
), KB Home (NYSE:
KBH
), M.D.C. Holdings, Inc. (NYSE:
MDC
) and Lennar Corporation (NYSE:
LEN
) surged 5.3%, 3.6%, 9.3%, 2.4%, 2.7% and 3.0%, respectively.
Separately, The Conference Board came out with its reading of
the Consumer Confidence Index, which fell to 62.0 in June, down
from 64.4 in May. The report added: "The Expectations Index
declined to 72.3 from 77.3. The Present Situation Index, however,
increased to 46.6 from 44.9 last month". The fall was larger than
consensus estimates, which had predicted the reading to come in at
63.3. Lynn Franco, Director of Economic Indicators at The
Conference Board, said: "Consumer Confidence declined in June, the
fourth consecutive moderate decline. Consumers were somewhat more
positive about current conditions, but slightly more pessimistic
about the short-term outlook".
Despite the fall in the Consumer Confidence Index, the consumer
discretionary sector still managed decent gains and the Consumer
Discretionary SPDR (XLY) climbed 1.3%. Among these stocks,
McDonald's Corporation (NYSE:
MCD
), Starbucks Corporation (NASDAQ:
SBUX
), NIKE, Inc. (NYSE:
NKE
) and Dollar General Corp. (NYSE:
DG
) moved up 1.1%, 1.2%, 1.0% and 3.3%, respectively. Meanwhile,
another component, News Corp (NASDAQ:
NWSA
) will soon be splitting into two. The Rupert Murdoch owned company
will now become two separate publicly traded companies, and
following the news the shares jumped 8.3%.
However, European concerns still remained an overhang on the
markets. Spain's borrowing costs jumped during short-term debt
auctions. Ahead of the European Union summit, German Chancellor
Angela Merkel remained resilient regarding the implementation of
common euro zone bonds. Earlier she had commented that she believed
the euro bonds to be "economically wrong and counterproductive",
and she later added "I don't see total debt liability as long as I
live".
BEAZER HOMES (BZH): Free Stock Analysis Report
DOLLAR GENERAL (DG): Free Stock Analysis Report
D R HORTON INC (DHI): Free Stock Analysis
Report
KB HOME (KBH): Free Stock Analysis Report
LENNAR CORP -A (LEN): Free Stock Analysis
Report
MCDONALDS CORP (MCD): Free Stock Analysis
Report
MDC HLDGS (MDC): Free Stock Analysis Report
M/I HOMES INC (MHO): Free Stock Analysis Report
NIKE INC-B (NKE): Free Stock Analysis Report
NEWS CORP INC-A (NWSA): Free Stock Analysis
Report
PULTE GROUP ONC (PHM): Free Stock Analysis
Report
STARBUCKS CORP (SBUX): Free Stock Analysis
Report
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