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.]