(XHB) Stock Market News for September 20, 2012 – Market News

A strong pair of housing sector reports helped benchmarks end in the green yesterday. Following the robust four-day rally last week, investors opted to take a break and the markets ended mostly in the negative zone on the first two trading days this week. However, benchmarks returned to their winning ways on Wednesday. However, a drop in crude prices dented the energy sector once again.

The Dow Jones Industrial Average (DJI) added 0.1% and closed at 13,577.96. The Standard & Poor 500 (S&P 500) edged up 1.73 points or 0.1% to finish yesterday’s trading session at 1,461.05. The tech-laden Nasdaq Composite Index was up 0.2% to end at 3,182.62. The fear-gauge CBOE Volatility Index (VIX) dropped 2.1% to settle at 13.88. Consolidated volumes on the New York Stock Exchange, the Nasdaq and the American Stock Exchange were about 6.12 billion shares, short of year-on-year daily average of 6.54 billion. The advancing stocks outran the decliners on the NYSE; as for 56% stocks that gained, 40% stocks closed lower.

The day’s action was dominated by a pair of strong housing sector reports, which also helped benchmarks end in the green after a gap of two days. While the National Association of Realtors (NAR) reported a better-than-expected jump in existing home sales, the Commerce Department came out with encouraging housing starts numbers. Both these metrics were at their individual highs in two years.

The NAR reported that total existing home sales jumped 7.8% in August to a seasonally adjusted annual rate of 4.82 million from 4.47 million in July. Consensus estimates had projected the numbers would come in at 4.56 million. Striking a positive note, Lawrence Yun, NAR chief economist said: “The housing market is steadily recovering with consistent increases in both home sales and median prices. More buyers are taking advantage of excellent housing affordability conditions”.

Additionally, the U.S. Department of Housing and Urban Development reported that privately-owned housing starts in jumped 2.3% August from the revised July estimate of 733,000 to reach a seasonally adjusted annual rate of 750,000 in August. However, consensus estimates had projected the numbers to reach 768, 000.

The encouraging housing reports subsequently boosted housing stocks. The SPDR S&P Homebuilders (XHB) jumped 1.8% and stocks including KB Home (NYSE:KBH), PulteGroup, Inc. (NYSE:PHM), Lennar Corp. (NYSE:LEN), Toll Brothers Inc. (NYSE:TOL), DR Horton Inc. (NYSE:DHI), Hovnanian Enterprises Inc. (NYSE:HOV) and Beazer Homes USA Inc. (NYSE:BZH) soared 3.6%, 4.3%, 1.9%, 3.5%, 4.1%, 1.6% and 6.2%, respectively.

However, the energy sector was not as lucky as it dropped to the negative zone for the third time this week. Crude prices continued to slump which affected the energy sector. The Energy Select Sector SPDR (XLE) was down almost 1.0% and stocks such as Exxon Mobil Corporation (NYSE:XOM), ConocoPhillips (NYSE:COP), Murphy Oil Corporation (NYSE:MUR), Hess Corporation (NYSE:HES), Schlumberger Limited (NYSE:SLB) and Occidental Petroleum Corporation (NYSE:OXY) dropped 1.2%, 0.9%, 1.3%, 0.7%, 2.0% and 2.0%, respectively.

On the international front, the Bank of Japan (BoJ) expanded its asset purchase plan by roughly $126 billion in order to boost economic growth. The announcement led to robust gains in the country’s indices and also partially improved global investor sentiment. The move comes after the US central bank announced a third round of quantitative easing (QE3) last week.

Zacks Investment Research

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