RTTNews - Following a considerably higher open, stocks are continuing their strong outing in mid-afternoon trading on Monday. The major averages are lingering near their best levels of the session as traders digested some encouraging data from the housing sector.
The National Association of Home Builders said its index of sentiment rose in May to a level of 16. This was up from the mark of 14 recorded for April and represented its highest reading since last September.
The attitudes of home builders improved for both the present situation and for the next several months, the survey showed.
The improvement in the housing index has added to general investor attitude that the beleaguered housing sector is bottoming, fueling prospects of near-term economic recovery.
Housing stocks were further bolstered by better-than-expected earnings from home improvement retailer Lowe's (LOW). The company announced first-quarter net income of $0.32 per share, beating out Wall Street analyst estimates of $0.25 per share. The stock rose following the news, climbing by 7.3 percent.
Wall Street now turns its attention to housing starts data due out Tuesday, and sales figures set to be released next week. Traders will also consider earnings from Home Depot, Inc. (HD), scheduled to release financial results for the first quarter on Tuesday.
Analysts project the number one U.S. home improvement retailer will report earnings of $0.29 per share, sharply lower than last year's $0.41 per share, with 11.4 percent anticipated decline in sales.
Meanwhile, the Federal Reserve continued it treasury buyback program this morning, part of its quantitative easing efforts. The New York arm of the Federal Reserve purchased $3.18 billion worth of securities with maturity dates ranging from August of 2019 to February of 2026. The day's buyback attracted strong interest, with a total of $15.22 billion in treasuries submitted for the purchase.
With the purchase, the government has bought back $107.87 billion in treasuries since the purchase program began on March 25th.
The major indices have continued their upward move in recent trading. The Dow is up 181.76 at 8,450.40, the Nasdaq is up 35.48 at 1715.62, and the S&P 500 is up 18.69 at 901.57.
A majority of the Dow components are in positive territory, contributing to the triple-digit gains being shown by the blue chip index.
Reflecting the interest in housing and housing related stocks are shares of Home Depot (HD), which are up by 6.0 percent on the day. With the climb, the stock has reached a 12-day high.
Bank of America (BAC) is turning in one of the Dow's best performances, with the banking services provider currently up 9.5 percent. The stock benefited from an upgrade by Goldman Sachs which switched its rating from Neutral to Buy. Shares of Bank of America are moving away from a 10-day low set late last week.
Meanwhile, shares of General Motors (GM), American Express (AXP) and Caterpillar (CAT) are also driving the Dow higher.
On the other hand, AT&T (T) is currently the only loser in the Dow, falling by 1.1 percent.
Notable strength has emerged in real estate stocks, with the Morgan Stanley Real Estate Index climbing by 7.0 percent on the session. With the advance, the index continues to climb away from a one-month low posted late last week.
Meanwhile, housing stocks continue to turn in one of the day's best performances, as reflected by the 5.6 percent gain currently being shown by the Philadelphia Housing Sector Index. With the advance, the index is moving further away from a one-month closing low it set last week.
Significant strength is also visible among banking and steel stocks, with the Kbw Banking Sector Index and the Amex Steel Sector Index up by 5.4 and 5.6 percent, respectively.
The day's gains are being mitigated by the retreat in gold stocks, with the Amex Gold BUGS Index dropping by 1.7 percent. The move comes as the price of gold futures has plummeted by more than $11 on the day.
In overseas trading, stock markets across the Asia-Pacific region finished largely mixed on Monday. Japan's benchmark Nikkei 225 Index fell by 2.4 percent, while Hong Kong's Hang Seng Index climbed 1.3 percent.
General market sentiment has picked up as India's Congress Party won a decisive victory in recent elections, raising prospects of stability and likelihood of economic reform in the world's most populated democracy.
The benchmark index for the Indian market closed up by 17.3 percent on the day following election news.
Shares of Indian based firms have also risen considerably on the news, with Wipro (WIT), Dr. Reddy's Laboratories (RDY) Sify Technologies (SIFY), ICICI Bank (IBN), Tata Motors (TTM) and HDFC Bank (HDB) all climbing on the day.
Meanwhile, the major European markets all closed higher on the day. The French CAC 40 Index and the German DAX Index closed up 2.4 percent, while the U.K.'s FTSE 100 Index finished up by 2.2 percent.
In the bond markets, treasuries closed firmly negative amid the rally in the stock market. Subsequently, the yield on the benchmark ten-year note closed up 8.8 basis points at 3.211 percent.
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