Stock Market News for October 18, 2012

Benchmarks closed in the green yesterday propelled by better-than-expected housing data. This was the third-consecutive trading day that the markets secured a seat in the positive zone. However, disappointing earnings results from certain tech bellwethers eroded some of the day’s gains. The housing and energy sectors were the leading gainers among the S&P 500 industry groups.

The Dow Jones Industrial Average (DJI) rose 0.04% to close the day at 13,557. The Standard & Poor 500 (S&P 500) climbed 0.4% to finish yesterday’s trading session at 1,460.91. The tech-laden Nasdaq Composite Index added 0.1% to end at 3,104.12. The fear-gauge CBOE Volatility Index (VIX) declined 1.0% to settle at 15.07. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.3 billion shares, slightly lower than the year-on-year daily average of 6.51 billion shares. For every two stocks that gained on the NYSE, one closed in the red.

The big news for the day was the sharp increase in housing starts. A report from the U.S. Census Bureau and the Department of Housing and Urban Development revealed that privately owned housing starts increased by 15.0% from August to an annual rate of 872, 000 in September. This was well above consensus estimates of 769,000. Housing starts recorded the quickest pace of increase since July 2008. In addition, single family housing starts increased by 11.0% from August to 603,000. The data also revealed that building permits for privately-owned housing units had jumped 11.6% from August to a seasonally adjusted annual rate of 894,000 in September. Single-family authorizations came in at 545,000 in September, up 6.7% from August.

The unexpected increase in housing starts provided a boost to the housing sector. The SPDR S&P Homebuilders gained 1.9% after the report. Stocks such as PulteGroup, Inc. (NYSE:PHM), The Ryland Group, Inc. (NYSE:RYL), KB Home (NYSE:KBH), Beazer Homes USA, Inc and M.D.C. Holdings, Inc. jumped 5.3%, 4.1%, 8.7%, 5.4% and 2.7%, respectively.

Meanwhile, shares of technology bellwethers Intel Corporation (NASDAQ:INTC) and International Business Machines Corp. (NYSE:IBM) tumbled following disappointing earnings results. IBM’s shares tumbled 4.5% after a dull third quarter. Earnings came in line, but revenues fell short of the estimates. Revenues also declined 5.4% from the year-ago quarter and all of the company’s operating segments suffered a downtrend. On the other hand, Intel, the world’s largest chip maker, lost 2.5% after providing a weak revenue outlook. Intel also said that sales of personal computer will remain low during the holiday season.

Disappointing earnings results dragged the technology sector into the red. The technology SPDR lost 0.5% yesterday. Stocks such as Oracle Corporation (NASDAQ:ORCL), Cisco Systems, Inc. (NASDAQ:CSCO), Juniper Networks, Inc., Polycom Inc and Dell Inc (NASDAQ:DELL) lost 2.0. %, 0.8%, 1.0%, 1.3% and 0.5%, respectively.

Meanwhile, financial companies reported a mixed set of earnings yesterday. Bank of America Corp (NYSE:BAC), the second largest U.S. bank, reported lower-than-expected results. However, The Bank of New York Mellon Corporation (NYSE:BK) and U.S. Bancorp (NYSE:USB) came out with better-than-expected quarterly figures. On the other hand, American Express Company’s (NYSE:AXP) profits rose marginally and were in line with estimates.

The financial sector finished in the green and the Financial Select Sector SPDR rose 1.2%. Stocks such as Bank of New York Mellon, Wells Fargo & Company, Morgan Stanley (NYSE:MS), Goldman Sachs Group, Inc. (NYSE:GS) and U.S. Bancorp jumped 5.5%, 2.2%, 3.5%, 1.4% and 1.8%, respectively.

The energy sector also garnered decent gains yesterday and the Energy Select Sector SPDR rose 1.2%. Stock such as Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), TOTAL S.A., BP plc (NYSE:BP) and Marathon Oil Corporation rose 1.1%, 1.0%, 1.5%, 2.9% and 2.3% respectively.

On the international front, investors awaited the GDP report from the world’s second-largest economy, China According to market experts, the county’s economic growth has started to stabilize with an improvement in housing starts, retail sales, manufacturing indices and construction machinery sales.