While you were sleeping: Housing offsets IBM, Intel
BUSINESSDESK: Wall Street opted to focus on another report pointing to better-than-expected signs of recovery in the American real estate market, as Intel and IBM failed to deliver with their latest results.
US housing starts jumped 15% last month to a seasonally adjusted annual rate of 872,000 units, according to Commerce Department data. The increase easily surpassed forecasts and came after yesterday's report showing confidence among home builders in October climbed to the highest level in a little over six years.
"One of the big headwinds for the economy has been the weak housing market and this indicates that headwind has dissipated," Gary Thayer, an economic strategist at Wells Fargo Advisors in St Louis, Missouri, told Reuters.
The latest US corporate earnings, however, showed plenty of challenges.
Shares of IBM suffered, last down 5.7%, after posting third-quarter revenue that fell short of analysts' forecasts, while those of Intel were last 3.1% weaker after its fourth-quarter earnings outlook did not live up to expectations.
That left Wall Street mixed. In afternoon trading in New York, the Standard & Poor's 500 Index rose 0.28%. The Dow Jones Industrial Average fell 0.24% and the Nasdaq Composite Index slipped 0.13%.
"The housing number gave people some confidence that maybe we are moving in the right direction economically, so it's one of those days where the glass seems half full more than half empty," Rick Meckler, president of investment firm LibertyView Capital Management in New York, told Reuters.
In Europe, the Stoxx 600 Index ended the day with a 0.5% gain on the previous close. And the euro strengthened 0.6% against the greenback, while rising 0.5% against the Japanese yen.
The mood on the eurozone was bolstered by Moody's decision late yesterday to confirm Spain's investment grade credit rating, fuelling optimism about the progress made in containing the region's debt crisis.
"It's all about expectations, which Spain was able to beat," Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon, told Bloomberg. "There has been talk about renewed appetite on behalf of Spain to take advantage of the next financial bailout package."
Spanish 10-year yields fell 32 basis points on the day to 5.50%, a level last seen early in April, according to Reuters. The spread over benchmark German Bunds fell below 400 basis points for the first time in more than six months.
But the EU crisis is yet unresolved. Germany today dropped its growth forecast for 2013 to 1% and S&P cut its rating on Cyprus, which earlier in the day said it expected talks with lenders to begin next week.