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Market Recap: Housing Starts Initiate Rally, Dow Climbs Over 300 Points

Markets closed way, way up on Wall Street today:

  • Dow +2.87 percent
  • S&P +2.98 percent
  • Nasdaq +3.19 percent
  • Oil +3.54 percent
  • Gold +1.24 percent

On the commodities front:

  • Oil (NYSE:USO) climbed to $97.38 a barrel
  • Gold (NYSE:GLD) climbing to $1,616.50 an ounce
  • Silver (NYSE:SLV) climbed 2.34 percent to settle at $29.55

(Related: Prospects for Payroll Tax Cut Are Grim After House Republicans Reject Temporary Extension)

Today’s markets were up because:

1) Housing: Housing starts surged in November to their highest since April 2010, led by a three-year high in multifamily units, offering hope for the weak housing market. The Commerce Department announced on Tuesday that housing starts last month jumped 9.3 percent to a seasonally adjusted annual rate of 685,000 units.

Residential construction was up 24.3 percent year-over-year in November, while building permits, a proxy for future construction, were up to their highest level since March 2010. Construction on multifamily units like apartments and townhouses surged 25 percent as the rental market improved, foreclosures having turned more Americans from buyers into renters. Still, new construction of single-family houses rose 2.3 percent last month as well.

2) Spain: Spanish borrowing costs plunged at an auction of short-term debt today, in a sign that investors are becoming more confident in the country’s ability to stay afloat and pay them back when the bonds mature early next year. Spain raised €5.6 billion, more than its goal of €4.5 billion, with investors demanding an interest rate of just 1.74 percent to lend to the government for 3 months, down sharply from the 5.1 percent yield at an auction in November.

3) Dow: All 30 of the Dow’s components were trading in the green today as the index popped nearly 3 percent. Even AT&T benefited from the rally despite announcing yesterday that, after much regulatory pressure, it would no longer pursue an acquisition of T-Mobile. Some of the Dow’s worst-performing stocks this year, including Caterpillar, JPMorgan, Hewlett-Packard, Cisco, Bank of America, and Alcoa were up more than 3 percent today, despite being deep in the red for the year.

[Editor’s note: the above is a cross post that originally appeared on Wall St. Cheat Sheet.]

Comments (24)

  • hauschild
    Posted on December 20, 2011 at 7:48pm

    At this point, I’d say the rally occurred to make people feel good before Christmas. It’s really a joke.

    Report Post »  
    • apu123
      Posted on December 20, 2011 at 8:34pm

      It’s not a joke, but a giant Ponzi scheme built on a house of cards backstopped by the taxpayers of countries that have a bit of fiscal sense.

      Report Post »  
  • apu123
    Posted on December 20, 2011 at 7:16pm

    Two things were responsible for the rally, both of which should
    not have fueled anything. The housing starts data was up due to people
    building rental properties, if people are renting they are not buying
    out of the huge and growing inventory of foreclosed/short sale
    properties and reducing inventory. Not a good thing for home values or
    the economy. European strength was based off the ECB’s LTRO
    operation where the ECB loans all ready insolvent banks money to buy
    bonds from insolvent sovereigns at really low 3 year interest rates. It
    might get the yields down short term but the ECB has a bloated balance
    sheet and can not afford to to it for long. There has been some
    speculation that the FED is going to monetize EU debt to keep the game
    going for our to big to fail banks but its balance sheet is not exactly
    in the best shape. So now the US and German taxpayers get to bail out
    the southern tier of the EU so bankers can look down their noses at us
    and get their hefty bonuses. They may get their Santa rally if the
    government can leak and fudge its unemployment numbers on Thursday and
    the National Association of Realtors (who double counted sales in their
    statistics for 7 years) can cook up some good numbers. Basically you can see that when ever BofA gets in a pinch near or under $5 a share there is a big rally the next day based off some FED intervention or some fudged statistics that show strength. Makes you wonder how bad things really are at BofA.

    Report Post »  
    • lukerw
      Posted on December 20, 2011 at 7:49pm

      What is going on? It’s like people see an End Of The World Event coming… yet, they continue to practice Golden Age Rituals! This like a Weird Dream…

      Report Post » lukerw  
  • Ironeagle
    Posted on December 20, 2011 at 6:58pm

    The world is on the verge of a global collapse…and the markets keep rolling along.

    Report Post » Ironeagle  
    • Thevoice
      Posted on December 20, 2011 at 7:28pm

      Last week the Desk Squatters that come up with the housing numbers . Admitted to making big mistakes double counting sales because of multiple MLS listings for the same homes….WTF …Really were going to take their word for it …Right ….Every thing is fixed now …Spain …Italy …Greece ..Illinois , California and all the rest of the progressive communist ideology has enough money now .(hope you get my sarcasm) ..all is well……Right ….Sure ..So then we should never hear another word about the growing debt problem again …hell it’s all fixed….

      Report Post » Thevoice  
    • Thevoice
      Posted on December 20, 2011 at 7:33pm

      In fact …That genius …Whats his name ….Ge partied big time with Goldman ….John or Jon or just dick… Corizine ….Dam he just missed it by a month …LOL

      Report Post » Thevoice  
    • apu123
      Posted on December 20, 2011 at 8:31pm

      Tell me about it, it is a stage managed situation, the FED and other central banks come to the rescue any time a too big to fail bank/investment house or country is in trouble. The political distortion in the economy is tremendous, most rational investors have fled the market due to the whip-saw nature of the markets created by this.

      It is a house of cards sitting on a giant Ponzi scheme.

      Report Post »  
  • Zpro
    Posted on December 20, 2011 at 6:38pm

    Do I hear the bull song?…..la da doo doo
    Yep, it’s definitely the bull song.

    Report Post »  
  • Micmac
    Posted on December 20, 2011 at 6:12pm

    Anything about the housing market coming back is all baloney. The only money builders can get is private money, as banks don’t loan on specs anymore, especially since Dodd-Franks. The amount of REOs still needing to be absorbed into the economy will take another 4 years +, since at last count I saw the number over 800,000 units. There are very small pockets of builders doing things (one-offs), but the larger products are being built by companies like KB Homes, Centex, etc., from their own pockets, and are already sitting on their mapped properties so why not.

    I see 50% + vacancies in strip centers all the time. Rent SF costs have collapsed.

    It’s not until all the REOs get to a decent number that it will make sense to build spec again. When you can buy a house in Detriot (pun intended) for $6,000.00, how can someone in that market compete?
    All the economic studies I see being done by real estate professionals and not Fedessionals say 2014 things may start picking up but not rolling until 2017-18.

    If NoBama is re-elected then thay say it won’t come back until 12 months after he is out of office.

    NoBama 2012
    Reboot Washington

    Report Post »  
  • Psychosis
    Posted on December 20, 2011 at 6:11pm

    she only told you that so you wouldnt find out she was hookin

    Report Post » Psychosis  
  • Krazy_Kreepy_Ketchup
    Posted on December 20, 2011 at 5:49pm

    As Drudge shows TODAY:
    The federal reserve is asking US banks to keep extra cash on hand (avoid a run mabey?

    The IMF (world banks sister-the international federal reserve) says the world economy is “at a very serious juncture”

    The UK’s AAA rating is threatened by “formidable challenges” AND

    “it will be a miracle if France maintains its AAA rating”

    Can anyone say post holiday collapse? How about them Iranians playing games in the straight of Hormuz?

    Go back to sleep. Just go niter-nite

    Report Post » Krazy_Kreepy_Ketchup  
  • Snowleopard {gallery of cat folks}
    Posted on December 20, 2011 at 5:37pm

    Just one more example of the markets not reflecting reality.

    Report Post » Snowleopard {gallery of cat folks}  
    • seeker9
      Posted on December 20, 2011 at 6:49pm

      Good day to take profits.
      Buy the dips, sell the rips! The money is very real!

      Report Post » seeker9  
  • garyM
    Posted on December 20, 2011 at 5:27pm

    Now starts the Obama campaign rethoric!

    Report Post »  
  • Uncurable wound
    Posted on December 20, 2011 at 5:26pm

    Greed, built on a throne of lies.The volume is dismal,this market is completely manipulated.
    They are making it worse day by day with their out of control greed.Oil jumped 3 1/2 % today,on what???-GREED!!!
    95% of you have no idea how bad this is gonna be.PLEASE PREPARE!!! PLEASE…
    Markets are up on homebuilder optimisim…PLEEASE!!! What does that mean?
    I mean this is really getting insane.
    So were building more apartments for people who have lost their homes.
    What are we going to do with all the vacant homes???
    Buck the Fanks!!!

    Report Post »  
  • Psychosis
    Posted on December 20, 2011 at 5:21pm

    it does this every year before christmas

    Report Post » Psychosis  
  • michael48
    Posted on December 20, 2011 at 5:11pm

    dead cat bounce…get one more load before the wall st. libs short everything…btw…big discounts on solar panels…shipping included from moonbeam-ville…

    Report Post »  
  • possom
    Posted on December 20, 2011 at 5:10pm

    So what! tomorrow it may drop 300 pts. These figure‘s don’t mean anything in a town with a 37% unemployment rate.

    Report Post » possom  
  • We are Americans
    Posted on December 20, 2011 at 5:06pm

    Somebody better explain that none of
    this can be true. We have an anti business
    socialist running the country. Somebody please
    let the stock market know. Hurry before
    they continue thinking the economy is
    getting better. Bet their a bunch if commies

    Report Post »  
  • TRONINTHEMORNING
    Posted on December 20, 2011 at 5:06pm

    The fix is in; it always is…The math is quite strange. We’ll see what happens next week, then the next.

    Report Post »  
  • KeithOlberdink
    Posted on December 20, 2011 at 5:02pm

    It is hard to believe that nations borrowing money to solve their debt problems is good news.

    Report Post » KeithOlberdink  

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