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Stocks Rebound With Housing Numbers


US housing numbers rebounded Tuesday, but whether that will jump-start the economy remains to be seen.


Following some strong US housing numbers, stocks were rebounding sharply on Tuesday morning. According to TheStreet:

The Dow Jones Industrial Average (^DJI) was surging 259.2 points, or 2.2%, at 12,025. The S&P 500 was rising 25.7 points, or 2.1% , at 1,231, and the NASDAQ was ahead by 56.9 points, or 2.3%, at 2,580. All 30-components of the blue-chip index were on a tear, with JPMorgan Chase (JPM), Chevron (CVX), and Caterpillar (CAT) leading the pack.

Earlier in the day, Benzinga published a piece asking if today's housing numbers could jump-start the economy.

"This morning," said Benzinga writer Abhi Rao, "traders will be for building permits and housing starts to be higher than estimates of 630K. If the number is higher than the estimate, equity market futures will immediately move higher, and barring unforeseen European news or other macroeconomic news, will set the stage for the US equity markets."

Whether the economy will jump-start remains to be seen, but the housing numbers have certainly given it a lift. TheStreet said:

The Commerce Department on Tuesday reported better-than-expected housing starts in November, rising 9.3% to 685,000 from the revised October estimate of 627,000 and better than the 630,000 that economists surveyed by Thomson Reuters were expecting. Building permit numbers for November also came in better than expected, rising 5.7% to 681,000 from the revised October estimate of 644,000, and better than the 635,000 that economists polled by Thomson Reuters were expecting.

Not everyone was being cheerful, with CNBC warning of home sales revisions. Diana Olick wrote:

The National Association of Realtors, for a number of reasons I won't get into because they've been widely reported, overcounted home sales during part of the last decadeand has spent the better part of this past year figuring out just how badly they did that. They consulted with economists at the Federal Reserve, Fannie Mae, Freddie Mac, the Department of Housing and Urban Development, the mortgage bankers, the home builders, as well as umpteen other housing specialists, and tomorrow they will release their results. Expectations are that home sales could be revised down anywhere from 10 percent to 20 percent. The Realtors' chief economist said the revision would be "meaningful."


Bullish: Traders who believe that the housing market will go from strength to strength now might want to consider the following trades:
  • Honestly, any realty business. Construction, too. If the market really is picking up and the economy is rallying, then get on that train fast.
Bearish: Traders who believe that these numbers do not point to a long-term recovery may consider alternative positions:
  • Hey, the rental markets will remain strong, especially in college towns where the turnover is high.
Editor's Note: This content was originally published on by Brett Callwood.

Below, find some more great ETF and market content from Benzinga:

By Abe Raymond
By Sam Mattera

By Jay Wong

Twitter: @Benzinga
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No positions in stocks mentioned.

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