Can the Dow Still Start a New Streak?

Uncertainty surrounding the Cypriot bailout took its toll on the Dow Jones Industrial Average (DJINDICES: ^DJI  ) , ending the index's winning streak at the 10-day mark. But with new housing-market stats increasing confidence in the rebounding market, the Dow may be ready to start a new streak. Since the job and housing markets have been two of the major drivers of investors returning to the stock market, continued good news from both may propel the Dow to great heights.

This morning the blue-chip index jumped on news that America's homebuilders started more new construction in February, with starts increasing 0.8% over January's figures, surpassing the Department of Commerce's expectations. Permits were up 4.6% in February, the highest level seen since mid-2008. As a proxy for future construction, the rising number of permits is a great signal that the housing rebound is continuing to gain momentum.

However, the enthusiasm wore off shortly before noon, and as of 12:05 p.m. EDT the Dow is down 0.2%.

Winners
Bank of America (NYSE: BAC  ) recently predicted that house prices will increase by 8% this year, spurring on improvements in both the housing and financial markets. If house prices improve from their current rates, there will be more activity on the markets, leading to bigger gains -- and because the American economy is so dependent on the housing market, that is a great sign of our continuing rebound.

The bank is also enjoying some press time this morning as lauded analyst Meredith Whitney continues to sing its praises, pushing the bank 0.7% higher. Bank investors can expect to see a lot of movement today and tomorrow as the FOMC's recent meeting results weave their way through Wall Street. Because the FOMC determines interest rate policy, the banks will be acutely sensitive to any decision that indicates a change in the current policy.

Outside the Dow, homebuilders Hovnanian (NYSE: HOV  ) and Pulte (NYSE: PHM  ) are both up, gaining 3% and 0.5%, respectively. The companies have been optimistic about the continued rebound of the housing market, but they maintain a strict sense of caution when predicting how the growth will continue. But with the increase in construction and permits, it's clear that homebuilders will be busy for quite a while, leaving both prospective homebuyers and investors happy.

Is B of A a buy?
Bank of America's stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it's critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool's premium research report on B of A, analyst Anand Chokkavelu, CFA, and Financials bureau chief Matt Koppenheffer lift the veil on the bank's operations, detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2320748, ~/Articles/ArticleHandler.aspx, 8/30/2014 2:15:02 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement