Analysts cautioned that recent big rallies in the stock market have been quick to fade as traders seize the chance to sell stocks and lock in gains. "If you're selling into rallies, it means people want out," said Quincy Krosby, Prudential Financial's market strategist. "They don't believe it's sustainable."
Take the Dow's 490-point jump Nov. 30 after major central banks made a coordinated move to prop up European lenders by freeing up cash. The one-day rally brought the Dow to 12,045, but that gain had evaporated by last week.
The Commerce Department said Tuesday that builders broke ground on 685,000 new homes last month, a 9.3 percent jump from October. That's the highest level since April 2010. Building permits, a gauge of future construction, increased 5.7 percent, spurred by a jump in apartment permits. Stovall said the surge in housing construction was another piece of evidence that the U.S. will avoid slipping into another recession soon. "It's great news," he said.
The report drove housing stocks higher. PulteGroup Inc. jumped 10 percent. D.R. Horton Inc. rose 5.7 percent.In other corporate news, â¿¿ General Mills Inc. dropped 1 percent after reporting that its quarterly profit sank 28 percent. The maker of Cheerios and Yoplait yogurt blamed higher costs for ingredients and packaging for pinching profit margins. â¿¿ AT&T Inc. rose 1.3 percent after the company abandoned its bid late Monday to acquire the wireless provider T-Mobile USA. Sprint Nextel Corp. gained 5 percent. Sprint, the No. 3 wireless carrier, had opposed the deal. â¿¿ Red Hat Inc. plunged 8.9 percent after the software company forecast revenue that was short of what analysts were expecting. Red Hat provides support to business users for the freely distributed Linux operating system. â¿¿ Oracle Corp. dropped 8 percent in extended trading after the business software giant's quarterly earnings and sales missed analysts' estimates.