Stocks Rally on Solid Housing Starts (AAPL, AIG, BAC, DIS, HAL, HD, JNPR, NBR, PHM, RF, S)

Published on Tuesday, 20 December 2011 15:14 Written by Christopher Lynn

New York, December 20^th (TradersHuddle.com) – Stock were rallying, with the Dow jumping more than 300 points after solid housing starts figures that showed the biggest jump since April 2010. Banking stocks and homebuilders received a boost, as shorts moved to cover. Sentiment had also been positive following a jump in German Business Confidence, which highlighted the underlying strength of Europe’s largest economy.

The Dow Jones Industrial Average was rallying 2.6%. The S&P 500 index was jumping 2.66%, while the NASDAQ was rallying 2.83%

The market started with solid gains following positive news out of Europe and better than expected housing data. An upside surprise in German IFO figure and solid demand at a Spanish short-term bond auction helped sentiment early on, while a jump in both housing starts and building permits in November was able to help boost futures, with participants cheering the positive data out of housing.

In Europe, equity markets closed higher following the Commerce Department data in housing starts and building permits, which jumped 9.3% to the their highest level in one and a half years and above expectations. A decline in Spanish bond yields following solid demand at an auction helped improved confidence, which was already at an improved level following better than expected German business confidence.

All of the S&P 500 sectors were moving sharply higher, with Energy, materials, financials, and industrials trading above 3%. Consumer staples and utilities underperformed, but still traded above 1.8%.

Energy received a boost from the improved sentiment around the economy in Europe and in the U.S., as traders cheered the encouraging news in the housing front. Crude oil rallied above $97 per barrel, lifting stocks in the sector.

Halliburton (NYSE:HAL), the oil services provider, was jumping 7.8% to $33.21, posting one of the biggest gains in the sector. Yesterday, Barclays said that Halliburton was one of the most attractive stocks in the space. Nabors Industries (NYSE:NBR), the land driller contractor, also was jumping more than 7% to $17.48. Nabors has calculated support at $16.04 and resistance at $19.01.

Financials were staging a rebound after data pointed to a recovery in the housing sector and euro zone debt jitters eased. Regions Financial (NYSE:RF), the Alabama based regional bank, was surging close to 7% to $4.08, posting one of the biggest gains in the sector.

American International Group (NYSE:AIG), the insurance company, was jumping 6.6% to $23.84 on signs of a recovery in the housing market. The tumble in housing hammered the company, which ended needing a bailout from the U.S, taxpayer. A subsidiary of the company priced $650 million of 8.625% Senior Notes due 2022.

And Bank of America (NYSE:BAC), the largest U.S. lender with the biggest exposure in the mortgage area, was rebounding after tumbling more than 4% in the prior session and closing below the $5 mark; the level in which some funds have limitations in owning the stock. Bank of America was jumping 2.81% to $5.13 after trading as low as $5.04 and as high as $5.16.

Technology also was trading higher after falling in 6 consecutive sessions. Apple (NASDAQ:AAPL) was lifting the space, as shares were rallying 3.31%, breaking above its 50day moving average in the $391 area after the International Trade Commission ruled that some HTC smartphones that use the Google’s Android software infringe an Apple patent. Moreover, the U.S. trade agency banned the importation of the devices from the Taiwanese company into the U.S. The ruling could be a landmark that could help Apple in other cases against other Android bases smartphone makers. Apple appears to be much more interested in halting sales of the products that infringe patents, especially into the U.S. market, rather than reaching a financial settlement. The heart of the disputes in this case were the technology that lets you tap your finger once on the touch screen to call a phone number that is written inside an e-mail or text message, and schedule a calendar appointment. A small but convenient feature for a smartphone, with the ruling actually having the potential to take this functionality out of Android based devices. Separately, according to Oppenheimer Verizon checks, the firm believes the company will sell 4.5 million iPhones in the quarter.

Juniper Networks (NYSE: JNPR) was surging 9% to $19.75, posting one of the biggest gains in the S&P 500. The company has accused Palo Alto Networks Inc. in a lawsuit of infringing six U.S. patents for firewall technology, which is used to protect communications networks from intrusion.

Also in the sector, Sprint Nextel (NYSE:S), the third largest U.S. wireless carrier, was jumping more than 6%, following news that AT&T dropped its bid to buy T-Mobile, bowing to U.S. regulators that gave fierce opposition to the deal.

Consumer discretionary stocks were also positive helping both the Dow and the S&P 500, following the improved housing start figures, which is a positive for the consumer. Homebuilders were jumping on the data, with Pulte Group (NYSE:PHM) rallying 9.8% to $6.14, posting the biggest gain in the S&P 500.

Walt Disney (NYSE:DIS), the world’s largest media company, and Home Depot (NYSE:HD), the largest home improvement retailer, received an outsized bid. Both posted the best gains in the Dow Jones Industrial Average, as shares were jumping 4.35% and 3.93%, respectively.