Positive economic news on the housing front has failed to outweigh continued concerns about corporate profits this morning. Following a massive rally yesterday, the markets were down throughout the morning and are now flat. As of 11:55 a.m. EST, the Dow Jones Industrial Average (INDEX: ^DJI ) is up a meager eight points.
Housing recovery continues on
Data released this morning suggests that the housing recovery continues to gain momentum. According to the U.S. Department of Commerce, domestic homebuilding activity rose to its highest level since July 2008. The data shows that housing starts increased 3.6% in October compared with the previous month. Since the same month last year, housing starts have increased by a staggering 41.9%. On a seasonally adjusted basis, construction began on 894,000 houses. Economists had predicted a more modest 833,000.
This adds to a growing chorus of evidence suggesting that housing has turned the corner. Data released by the National Association of Realtors yesterday showed that sales of existing homes last month increased 2.1% over September and 10.9% over the same month last year. As I noted yesterday, the association's chief economist even went so far as to say that we "may have a persistent inventory shortage situation next year."
To see why our own Morgan Housel thinks a housing recovery is evidence of a "coming boom," click here.
Today's best- and worst-performing stocks
Shares in Hewlett-Packard (NYSE: HPQ ) are down 10.3% to a new 10-year low following the company's fourth-quarter earnings release. For the quarter, the company reported a $6.9 billion loss on $30 billion in revenue. Both figures represent significant declines from the same period a year ago.
More significantly, the company wrote off $8.8 billion in goodwill associated with its acquisition of Autonomy, a U.K. software maker for which HP paid more than $10 billion in 2011. HP CEO Meg Whitman is leveling allegations of fraud against the acquired company's former management, saying that an internal investigation revealed "serious accounting improprieties" and "outright misrepresentations," according to The Wall Street Journal.
Former HP CEO Lee Apotheker, who oversaw the company at the time of the acquisition, released a statement to the press today defending his role:
According to HP, the accounting issues it discovered pre-date its acquisition of Autonomy. As such, it's apparent that Autonomy's alleged accounting misrepresentations misled a number of people over time -- not just HP's leadership team, auditors and directors. In fact, the alleged improprieties apparently came to light only after an internal whistleblower raised the issue in the spring, well after my departure.
In other news, JPMorgan Chase (NYSE: JPM ) announced that it had selected a new chief financial officer. In the wake of the multibillion-dollar London Whale scandal, the bank has undertaken a wide-ranging reshuffling at the executive level. The candidate selected is 43-year-old Marianne Lake. Lake currently serves as the CFP of JPMorgan's retail banking operations.
Meanwhile, in the retail space, investors in ailing electronics retailer Best Buy (NYSE: BBY ) saw their investments lose almost 11% today. Like HP, the company reported earnings this morning that widely missed bottom-line estimates. For the quarter, the company earned $0.03 per share compared with the consensus estimate of $0.13. In addition, it noted that same-store sales, a pivotal metric in the retail industry, decreased by 4.3%. As my colleague Brian Pacampara observed, this reinforces concerns that consumers continue to use the stores as showrooms for online purchases from the likes of Amazon.com (Nasdaq: AMZN ) .
The Foolish bottom line
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