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TheStreet Open House

Stocks Gain, Housing Stocks Sink

NEW YORK ( TheStreet) -- Major U.S. stock markets rose Friday and the S&P 500 closed the week in positive territory after shrugging off a brief dip on a weak new-home sales report.

The S&P 500 added 0.39% to 1,663.50. The index increased 0.46% for the week. The Dow Jones Industrial Average rose 0.31% to 15,010.51. The blue-chip index slipped 0.47% for the 5-day trading period. The Nasdaq booked a 0.52% gain to 3,657.79. The tech-heavy index jumped 1.52% for the week, despite having shut down trading on the Exchange for three hours Thursday after a rare technical malfunction.

"The market is in this mode of trying to figure out what interest rates are going to be and when tapering is going to happen," said Randy Frederick, managing director of active trading at Charles Schwab.

Microsoft (MSFT ) popped 7.4% to $34.77 on news that CEO Steve Ballmer will retire within the next 12 months. The company known for its Windows operating system booked the second largest gains on the S&P.

Autodesk was the top performer Friday on the S&P 500 as B. Riley & Co. upgraded the software company to "Buy" from "Neutral." Shares surged 7.7% to $38.91.

Stocks tied to the housing industry were among the worst percentage performers Friday on the S&P. Vulcan Materials (VMC), D.R. Horton (DHI) and Lennar (LEN) all closed down near 3% as a report said new home sales plummeted in July.

The Census Bureau said Friday that new-home sales for July plummeted to 394,000. Economists expected sales to fall to a seasonally adjusted annual rate of 490,000 in July. June sales were revised to 455,000 from 497,000.

The latest housing market release follows upbeat existing-home sales data earlier this week that showed sales rising to a three-year high to a greater-than-expected seasonally adjusted annual rate of 5.39 million for July. Economists warn the level of existing-home sales may have been lifted by the rush of potential buyers into the market to lock in lower mortgage rates.

Federal Reserve Vice Chair Janet Yellen is expected to chair panel discussions at the annual Kansas City Fed symposium in Jackson Hole, Wyo. on Friday. Investors will remain focused on potential clues on the Federal Reserve's stimulus tapering timeline. Fed Chairman Ben Bernanke is not joining the event this year.

The benchmark 10-year Treasury was jumping 20/32, diluting the yield to 2.816%. Gold prices surged $25 to settle at $1,395.80 an ounce on the back of poor new home sales as the yellow metal intraday came within 10 cents of reaching the key technical level of $1,400.

Moody's Investor Service said Thursday said it was reviewing whether it will continue to assume the U.S. government will bail out the nation's largest banks when setting its bond ratings. As a result, the agency said it could cut bond ratings for four of the nation's largest banks, and is uncertain whether other firms will also face the prospect of downgrades.

The review comes nearly five years after the U.S. Treasury injected capital into Wall Street's largest banks, all of which was later repaid, with interest. The action by Moody's could lead to ratings downgrades for Goldman Sachs (GS), JPMorgan Chase (JPM), Morgan Stanley (MS) and Wells Fargo (WFC). Financial sector stocks gained 0.63% on Friday.

-- Written by Andrea Tse and Joe Deaux in New York

>To contact the writer of this article, click here: Andrea Tse.>

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