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Home Prices Send Stocks Higher Despite Other Ominous Signs

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Blue-chip stocks are considerably higher today after data showed that home prices are continuing their upward ascent. According to Standard & Poor's Case-Shiller home price index, prices increased in January by 8.1% on a year-over-year basis. Economists polled by Thomson Reuters had forecast a rise of 7.9%. On the heels of this, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is up by 92 points, or 0.64%, with roughly an hour left in the trading session.

The news about home prices came amid a flurry of economic reports. Data released from the Department of Commerce today also showed that sales of new homes fell 4.6% last month to a seasonally adjusted 411,000. Economists had predicted a rate of 415,000. And in the same report, the number of new homes listed for sale increased to 152,000 at the end of February. That is the highest figure since 2011.

Shares of homebuilders are nevertheless lower. While prices are up, this is likely a reflection of the slight miss on new-home sales. Hovnanian (NYSE: HOV  ) is faring the worst, down 3% at the time of writing, followed by PulteGroup, KB Homes, and Toll Brothers, all of which are off by less than 1%.

Separately, a press release from the Conference Board, a private research group, suggests that confidence among U.S. consumers is waning. The firm's consumer sentiment index declined to 59.7 in March, down from a revised reading of 68 in February. Economists surveyed by Bloomberg had forecast a reading of 67.5.

According to Lynn Franco, the group's director of economic indicators: "The loss of confidence, particularly expectations, mirrors the losses experienced this past December and January. The recent sequester has created uncertainty regarding the economic outlook and as a result, consumers are less confident."

Needless to say, the news isn't helping the Dow's largest retail stock, Wal-Mart (NYSE: WMT  ) , which is down by 0.2% in afternoon trading. Paradoxically, however, as my colleague Morgan Housel has noted, there seems to be a loose inverse relationship between the strength of the overall economy and Wal-Mart's same-store sales. If things continue to deteriorate, in turn, that could actually bode well for the retail giant.

Finally, orders for durable goods rose 5.7% last month. This was the highest level since September, and it follows a 3.8% drop the prior month, according to the Department of Commerce. As my colleague Dan Dzombak noted, there was particular strength in the transportation market, particularly with regard to aircraft, "where new orders jumped by 22%."

With this in mind, it should be no surprise that shares of Boeing (NYSE: BA  ) are soaring today. Additionally, as fellow Fool Dan Carroll observed, the aerospace company's flagship 787 Dreamliner successfully completed a two-hour test flight to assess changes made to its battery. The state-of-the-art plane has been grounded since experiencing trouble with the batteries earlier this year.

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Related Tickers

9/27/2016 4:45 PM
^DJI $18228.30 Up +133.47 +0.74%
BA $131.32 Up +0.75 +0.57%
Boeing CAPS Rating: ****
HOV $1.66 Down -0.05 -2.92%
Hovnanian Enterpri… CAPS Rating: **
WMT $72.33 Up +0.71 +0.99%
Wal-Mart Stores CAPS Rating: ***