Dow jumps 103 on improving housing picture
Stocks rally as investors cheer the biggest gain in housing starts since 2008. IBM and Qualcomm results cheer investors. American Express sees some consumer caution. Intel leads chip stocks higher.
Stocks rallied for the third day in the last four, paced by a strong surge in semiconductor and software stocks and helped by the biggest monthly gain in housing starts in nearly four years.
In addition, Federal Reserve Chairman Ben Bernanke told a congressional committee that the Fed was ready to help support the economy if conditions require, but he didn't offer specifics. Bernanke made a similar pledge in testimony Tuesday before the Senate Banking Committee.
The rally came as earnings from Intel (INTC), Honeywell (HON) and Stanley Black & Decker (SWK) cheered investors. Bank of America (BAC) results generated little enthusiasm. Crude oil (-CL) was higher in New York as domestic inventories were lower than expected. Gold (-GC) was lower.
After the close, IBM (IBM) earnings per share beat Street estimates, and shares were higher. Qualcomm (QCOM) shares were higher despite warning about slowing demand for smartphones and a shortfall in supply of chips. American Express (AXP) shares were off slightly. Revenue growth was 7%, "slower than the increases we’ve seen in the recent quarters," CEO Ken Chenault said in a statement. But the credit-card company beat Street estimates.
The Dow Jones industrials ($INDU) were up 103 points to 12,909, their second gain of 100 points or more in three days. The Standard & Poor's 500 Index ($INX) was up 9 points to 1,373. It hit 1,375 early in the afternoon, the best level in two months. The Nasdaq Composite Index ($COMPX) gained 33 points to 2,943.
The Nasdaq-100 Index ($NDX) had gained 34 points to 2,626, led by gains in Intel, Microsoft (MSFT) and Qualcomm and graphics-chip-maker Nvidia (NVDA). (Microsoft is the publisher of MSN Money.) Apple (AAPL) was off 68 cents to $606.26.
The Federal Reserve's Beige Book report offered a snapshot of an economy that's growing modestly at best. Activity for many businesses has softened in recent months. There was concern about the worsening drought in the Midwest and other areas. Housing activity seems to be getting better.
Intel jumped 83 cents to $26.21 after posting earnings that beat estimates while scaling back its annual sales forecast. EMC (EMC) rallied $2.16 to $25.08 after announcing a new chief executive officer at VMware (VMW). EMC owns a majority stake in the software maker. VMware was up $9.69 to $89.98.
IBM raises guidance
IBM said it earned $3.51 a share, up from $3.09 a year ago and ahead of the Street estimate of $3.42 a share. Revenue of $25.8 billion was a touch below the estimate of $26.3 billion.
The company raised its full-year earnings estimate to $15.10 a share at least. It had been $15 a share.
Shares were up $3.48, or 1.9%, after hours to $191.73. The regular close of $188.25 was up $4.60.
Qualcomm says smartphone growth boosting results
Qualcomm shares jumped $2.94, or 5.3%, after hours to $58.99. The company said its fiscal-third-quarter earnings were up 17% to 69 cents a share, with revenue up 28% to $4.6 billion as the company benefited from rapid growth of smartphone demand.
It sees growth moderating a bit in the latter half of the year because of shortages of new chips, which are made in Taiwan. For the fiscal year, Qualcomm sees earnings of $3.61 to $3.67 per share. It had projected $3.61 to $3.76 earlier this year. It sees $18.7 billion to $19.1 billion in revenue, a change from earlier guidance of $18.7 billion to $19.7 billion.
Qualcomm shares rose $1.59 to $56.05 in regular trading.
American Express sees consumer caution
American Express shares were off 49 cents to $57.80 after slipping 39 cents to $58.29 in regular trading.
As noted, the company said credit card transactions were up 7% from a year ago, less than expected. Most analysts attributed the slower growth to increasing consumer caution. At the least, American Express described the economic outlook at "uncertain."
The company earned $1.15 a share, or $1.3 billion, up from $1.10 a share a year ago, or $1.295 billion. Revenue from credit cards was up 5% to $6.84 billion, up from $6.535 billion. A rising dollar depressed international revenue.
Gold settled down $18.70 to $1,570.80 an ounce. Silver (-SI) settled down 22.1 cents to $27.10 an ounce. Copper (-HG) was up 1.85 cents to $3.474 a pound, largely because of housing gains.
Crude oil was up 54 cents to $89.76 a barrel in New York.
|Energy prices -- New York close|
|Wed.||Tues.||Month chg.||YTD chg.|
|Crude oil (-CL)||$89.87||$89.22||5.78%||-9.07%|
|Heating oil (-HO)||$2.8776||$2.8422||6.19%||-1.26%|
|Natural gas (-NG)||$2.9730||$2.7960||5.28%||-0.54%|
|(per mil. BTU)|
|Unleaded gasoline (-RB)||$2.7755||$2.7349||5.46%||4.44%|
|(per gallon; AAA)|
Some cheer from housing
Housing starts hit a seasonally adjusted rate of 760,000 in June, the largest monthly rate since October 2008 as the full force of the Great Recession was hitting. The rate was up 6.9% from May and 23.6% from June 2011.
Building permits were off 3.7% from May to a seasonally adjusted 755,000. That was mostly due to a decline in permits for apartments. Single-family permits were up 4.7% to a seasonally adjusted 539,000.
The starts rate has averaged 727,000 units for the first half of the year, up 19.6% from 587,000 a year ago and 31% from 2009, when the housing market essentially collapsed. But starts have a long way to go. Normally, about 1.5 million units are built a year.
Housing has been a surprise in 2012, with construction and sales showing signs of life.
Homebuilding shares were mostly higher. The Philadelphia Housing Sector Index ($HGX) was up slightly at 139.94. The index is up 36% this year.
Bank of America is still cutting costs
Bank of America shares were off 3953ents to $7.79. The company earned 19 cents a share in the second quarter, 5 cents better than expected. But revenue of $21.97 billion missed estimates by some $900 million. The profit gain was achieved big cost cuts.
The company said its loan book shrank from the same quarter last year, its interest income fell 15%, and each of its divisions except for mortgage lending posted lower revenue.
The company plans to cut costs by $3 billion a year in commercial lending, investment banking and wealth management.
One of the biggest reasons Bank of America is struggling showed up again today. The company said it will pay $375 million to settle a lawsuit brought by Syncora Guarantee, a bond insurer, over toxic mortgage-backed securities at the center of the 2008 financial crisis.
Syncora sued Bank of America in 2009 to recover losses on securities transactions made by Countrywide Financial, which Bank of America bought in 2008. Syncora said it had been duped into insuring the mortgage-backed securities and that Countrywide had misrepresented the quality of the underlying mortgages.
The Countrywide deal brought with it billions of dollars in problems.
|Short hits from the markets -- New York close|
|Wed.||Tues.||Month chg.||YTD chg.|
|13-week Treasury bill||0.0900%||0.080%||12.50%||800.00%|
|5-year Treasury note||0.594%||0.618%||-18.52%||-28.43%|
|10-year Treasury note||1.479%||1.501%||-10.85%||-20.95%|
|30-year Treasury bond||2.580%||2.595%||-6.62%||-10.70%|
|U.S. Dollar Index||83.196||83.168||1.77%||3.32%|
|(in U.S. $)|
|U.S. $ in pounds||£0.639||£0.639||0.28%||-0.78%|
|Euro in dollars||$1.23||$1.23||-2.67%||-5.17%|
|(in U.S. $)|
|U.S. $ in euros||€ 0.814||€ 0.813||2.74%||5.45%|
|U.S. $ in yen||78.93||79.07||-1.03%||2.37%|
|U.S. $ in Chinese||6.39||6.37||0.30%||1.04%|
|(in U.S. $)|
|(in Canadian $)|
|(per troy ounce)|
|(per troy ounce)|
|Crude oil (-CL)||$89.87||$89.22||5.78%||-9.07%|
More lies coming off Wall Street and as for the banks didnt the banks have good news last Friday saying that things were great for the bankers and the housing is flat...gotta loved rigged markets this is what a country that is on it's last legs looks like, the US is falling apart because of congress can you believe it took a little over 535 people to ruin this or better yet sell this country out to the bankers well Sheeple when is it time to take back America?
Yeah, housing starts are doing better!!! Whoohoo...... hold on, wait just a minute. What about existing homes and their values? Won't more new homes further reduce the value of existing homes and further hurt the exisitng homeowner? Especially since most markets still have tremendous amounts of existing home inventory on hand????? Oh, I guess not so good news huh?
"Not sure why anyone who makes under 50k would be a republican but there are so many of them.....it's weird"
Uh, Pete, maybe it is because there are values that political parties represent, apart from economic issues. You might find this hard to believe, but there are many people of modest means, who aren't democrats because they don't support things like abortion on demand and reckless government spending and the growth of the federal government.
Seriously, apart from the fact that dems tend to support "social welfare type spending" and redistribution of wealth to people who make under 50K, why sholuld the guy in your example be a Dem?
It isn't like Dem policies are going to help him get a job, or a better job or increase his spending power, through a stronger dollar.
It is laughable that you would assume that "every person who makes under 50K should be a Dem" just because Dems work so hard at playing the class warfare card.
Some people actually use their brains and make decisions on something other than "the fallacy that Dems actually care about their economic situations." Dem politicians will just do everything that they can to convince poorer voters that they care about them, simply to get their votes. Meanwhile, these politicians dine on steak and lobster, while claiming they are doing all they can so that you can get a burger at Mickey Ds.
taking flight said:
"Lets not forget the auto maker bail outs that were successful. They were complaining about him spending too much money and that it was going to fail."
I think it is a bit early in to the game, to make the claim that "the bailouts were succesful." Let's see what these car companies are doing in 10 years or more before we claim success from their receipt of tens of billions of dollars of tax payer money.
I'll bet that if you take many failing businesses in this country and give them tons of free money, that their businesses will look good for a while too.
The issue is how will US auto companies do, in an increasingly competitive environment? Can these companies hold down labor costs and put out a product that not only US consumers want, but also buyers in other countries.
These companies got so much bailout money that you really can't claim success, until you see where they stand after a decade at a minimum.
We need a real reform president. We need a flat tax and we need to purge most of the senate and half the house to get there.
This is not a party line thing - it's a real problem.
So this will take more than 8 years in the best case.
Our biggest problem is the - hey I'm a ??? Party guy and that's how I vote.
That is how we get people in for so long they get the black vote after being in the KKK for years.
Sorry to ramble, but we need to look at each and every one vote we make - and make it count to the best of our ability.
Scranton, Pa. Mayor Chris Dohtery since 2001 City filing for Bankruptcy
Put all city employees pay back to minimum wage.
Stockton, Ca Mayor Ann Johnson since 2008 . City filing for Bankruptcy
She got $45,000.00 from the "Service Employees International Union" because "Union members believed Johnson would treat city employees more fairly"
San Bernardino, Ca Mayor Pat Morris since 2005 City filing for Bankruptcy
cooking the books. Been going broke for years. In 1996 the city's retirement pension was 1.5% of their yearly budget & in 2012 it is 15% of their yearly budget. 15% of a budget that is paying for retired city workers, some getting almost double their salary from when they were working.
Many many more cities across the nation are going to be filing for Bankruptcy for protection. Union pensions & salaries are out of control in almost every city in the nation.
Pete- I didn't want to make it a "R" versus "D" argument but since you brought it up, Every city listed has a democratic Mayor running it.
Notice charley and his never ending optimism for hope for odumbo
building permits ? you need them to build a stinking doghouse doesnt say ****, every other house in my area has been on the market for years NONE are moving
Notice that on days bad reports or numbers come out the market stays flat or even moves up a little and days of "supposedly" good numbers come out, they rally the market to the moon? Such a rigged game its just pathetic and predictable.
Oh BTW, the housing start number is one of the most misleading and useless stats they have, right up there with "pending" home sales. Here is some real news for people dumb enough to believe anything these corporate news jockeys throw out:
Appropriately coming just after today's Housing Starts data, which captured MSM headlines will blast was "the highest since 2008" is the following chart from this morning's Bloomberg Brief,
The shadow inventory of homes – those in foreclosure plus those 90 days late on mortgage payments – is on the rise again, a further indication that the supply side has not yet healed. Accoring to RealtyTrac, foreclosure starts jumped 6 percent on a year ago basis in the second quarter, the first year-over-year increase since 2009. There are roughly 4.16 million homes that could begin to flow to market.
Once one takes the number of homeowners 30- to 90-days late on their mortgage payments and includes the likely default of those that have negative equity on their homes, there is a strong possibility more than 6.5 million additional foreclosures will enter the pipeline. The addition of homes that banks may be holding back suggests a much larger number. Laurie Goodman of Amherst Securities Group has testified before Congress that it could be as high as between 8 and 10 million.
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[BRIEFING.COM] The stock market maintained a narrow trading range on Thursday before ending the session essentially where it began. The S&P 500 added less than a point, while the small-cap Russell 2000 (-0.2%) underperformed.
Equity indices displayed early strength thanks in part to an overnight boost from better than expected economic data in China and Europe. Specifically, China's HSBC Manufacturing PMI surged to an 18-month high (52.0 from 50.7), while Eurozone Manufacturing PMI ... More
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