Stocks Rise on Housing Report, Cisco Surge
NEW YORK ( TheStreet) -- U.S. stocks rose Thursday on evidence that the housing industry, which has been in a four-year recession, is coming to life.
German Chancellor Angela Merkel's reiteration of European Central Bank President Mario Draghi's vow to do whatever is necessary to save the euro also buoyed stocks, pushing major equity averages to their biggest gains in nearly two weeks.
"We feel committed to do everything we can in order to maintain the common currency," Merkel said at a joint press conference with Canadian Prime Minister Stephen Harper during her first bilateral visit to the country.
Technology was also a bright spot for the broad market, with Cisco (CSCO) surging 9.5% on the heels of an above-consensus quarterly profit and a surprise 75% dividend boost.The Dow Jones Industrial Average traded up 85 points, or 0.7%, at 13,250. Dow winners were ahead of losers, 22 to 8. Aside from Cisco, the biggest blue-chip gainers were 3M (MMM), American Express (AXP), Caterpillar (BAC) and Home Depot (HD). Wal-Mart (WMT) was the biggest percentage decliner in the Dow after the world's largest retailer edged Wall Street's profit expectations in the latest quarter but came in light on revenue and narrowed its full-year earnings outlook. The S&P 500 closed up 10 points, or 0.7%, at 1,416, moving within 5 points of the four-year closing high reached in early April. The Nasdaq rose 31 points, or 1%, at 3,062. The strongest performers in the broad market were the consumer cyclical, basic materials, technology, capital goods and conglomerate sectors. Only the healthcare sector was in the red. Winners were ahead of losers by a 2.5-to-1 ratio on the Big Board and a 2.3-to-1 ratio on the Nasdaq. The Commerce Department said Thursday that housing starts in July were at a seasonally adjusted annual rate of 746,000, which was 1.1% below the June estimate of 754,000. But building permits last month jumped to a four-year high at a seasonally adjusted annual rate of 812,000, which was 6.8% above the June rate of 760,000. Economists on average had predicted that housing starts would show an annual rate of 757,000 and that building permits would come in at a 770,000 annual rate. "Evidence of a recovery in the housing market being sustained is continuing to pile up," said David Onyett-Jeffries, an economist at RBC Economics. "Even with today's reported modest decline in the pace of housing starts in July, new-home construction maintained its underlying upward trajectory with the six-month moving average reaching its highest level since December 2008." In addition, the Labor Department said initial jobless claims for the week ended Aug. 11 increased by 2,000 to 366,000 from the previous week's upwardly revised figure of 364,000. The four-week moving average was 363,750, a decrease of 5,500 from the previous week's average of 369,250. Continuing claims for the week ended Aug. 4 fell 31,000 to 3.305 million. Economists surveyed by Reuters on average were expecting initial jobless claims of 365,000 and continuing claims of 3.3 million. The Philadelphia Fed's business outlook survey was slightly worse than expected, coming in at negative 7.1 vs. the consensus view of negative 5. Abroad, Chinese Premier Wen Jiabao said during an inspection tour of the eastern province of Zhejiang that there's still more room for monetary easing in China thanks to cooling inflation in the country, according to state media.
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