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Positive housing data and a subsequent rally in the housing shares carried the benchmarks back into the green after a day of severe losses. Along with the strength in homebuilders, the consumer discretionary sector also registered strong gains. However, investor sentiment was not spared from the concerns related to European debt woes.

The Dow Jones Industrial Average (DJI) edged up 0.3% and ended at 12,534.67. The Standard & Poor 500 (S&P 500) gained 0.5% and finished yesterday’s trading session at 1,319.99. The tech-laden Nasdaq Composite Index increased 0.6% to move up to 2,854.06. The fear-gauge CBOE Volatility Index (VIX) dropped 3.2% to settle at 19.72. The Street was not too busy as consolidated volumes on the New York Stock Exchange, the Nasdaq and the American Stock Exchange were roughly 5.9 billion shares, lower than this year’s daily average of 6.82 billion shares. Advancing stocks had a better than the decliners; as for nine stocks that gained, five stocks moved lower.

Markets had opened in the green but soon lost all their gains to move lower. At first it seemed it was another day that was to be dominated by concerns from the other side of the Atlantic, housing data came in at the right time to rescue the benchmarks. For the first time since last autumn, U.S. home prices moved up and that was reason enough to lift investors’ mood. The S&P/Case-Shiller Home Price Indices came in better than expected recording a 1.3% increase in average home prices in the month of April for both the 10- and 20-City Composites.

Commenting on the data, David M. Blitzer, Chairman of the Index Committee at S&P Indices said: “With April 2012 data, we finally saw some rising home prices… On a monthly basis, 19 of the 20 MSAs and both Composites rose in April over March. Detroit was the only city that saw prices fall, down 3.6%. In addition, 18 of the 20 MSAs and both Composites saw better annual rates of return. It has been a long time since we enjoyed such broad based gains”.

Following the report, the housing sector posted strong gains and the SPDR S&P Homebuilders (XHB) jumped 2.2%. Among the stocks that gained, PulteGroup, Inc. (NYSE:PHM), D.R. Horton, Inc. (NYSE:DHI), M/I Homes Inc (NYSE:MHO), Beazer Homes USA, Inc. (NYSE:BZH), KB Home (NYSE:KBH), M.D.C. Holdings, Inc. (NYSE:MDC) and Lennar Corporation (NYSE:LEN) surged 5.3%, 3.6%, 9.3%, 2.4%, 2.7% and 3.0%, respectively.

Separately, The Conference Board came out with its reading of the Consumer Confidence Index, which fell to 62.0 in June, down from 64.4 in May. The report added: “The Expectations Index declined to 72.3 from 77.3. The Present Situation Index, however, increased to 46.6 from 44.9 last month”. The fall was larger than consensus estimates, which had predicted the reading to come in at 63.3. Lynn Franco, Director of Economic Indicators at The Conference Board, said: "Consumer Confidence declined in June, the fourth consecutive moderate decline. Consumers were somewhat more positive about current conditions, but slightly more pessimistic about the short-term outlook”.

Despite the fall in the Consumer Confidence Index, the consumer discretionary sector still managed decent gains and the Consumer Discretionary SPDR (XLY) climbed 1.3%. Among these stocks, McDonald's Corporation (NYSE:MCD), Starbucks Corporation (NASDAQ:SBUX), NIKE, Inc. (NYSE:NKE) and Dollar General Corp. (NYSE:DG) moved up 1.1%, 1.2%, 1.0% and 3.3%, respectively. Meanwhile, another component, News Corp (NASDAQ:NWSA) will soon be splitting into two. The Rupert Murdoch owned company will now become two separate publicly traded companies, and following the news the shares jumped 8.3%.

However, European concerns still remained an overhang on the markets. Spain’s borrowing costs jumped during short-term debt auctions. Ahead of the European Union summit, German Chancellor Angela Merkel remained resilient regarding the implementation of common euro zone bonds. Earlier she had commented that she believed the euro bonds to be "economically wrong and counterproductive", and she later added “I don't see total debt liability as long as I live”.

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