Banks and Home Builder Sentiment Help Stocks Rally:
Europe off the table for now.
Stocks rose today led by positive news from the banking and housing sector. Bank of America beat Wall Street earnings expectations and rose 7% while Goldman Sachs rose 2 % in late trading today. Goldman Sachs reported a loss but this didn’t rattle investors. Any signal that the U.S. banking sector is strong in comparison to Europe is positive news in the short run and the Greek debt crisis was less of a concern to investors today.
The National Association of Home Builders said today builder sentiment increased to its highest level in over a year. The NAHB index rose from 14 to 18 this month and the reading was interpreted positively by investors. Any reading below 50 is considered pessimistic but the rebound today was a sign that the housing sector is mixed-neutral. Investors are suffering from “Europe analysis strains” and today was a good reason for market participants to weight news from the region with lower importance. As news from Europe continues to come in, traders may look for strength in the U.S. as a sign that the contagion is less likely to spread across the pond.
The NAHB statement today:
“Builder confidence regained some ground in October due to modest improvements in buyer interest in select markets where economic recovery is starting to take hold and where foreclosure activity has remained comparatively subdued,” said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. “That said, confidence remains quite low as builders continue to confront overly restrictive lending policies that are discouraging prospective buyers, problems with new-home appraisals and widespread uncertainty regarding federal support for homeownership.”