Housing Data Shelters Dow From Further Losses

A day after its biggest loss in four weeks, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is back on the rise. Following some encouraging economic data and a little relief on the Fed speculation front, investors may be feeling optimistic about today's prospects in the market. As of 11 a.m. EDT, the Dow is up 75 points thanks to good news.

Home is where the heart is
Housing data is a beacon in the current dimly lit economic environment. While the remainder of the economy's recovery seems very uncertain, the housing market has become the heart of the overall recovery -- repeatedly proving that the rebound is on the right track. This morning investors were given another glimpse of the positive momentum when the National Association of Realtors reported that pending home sales rose 0.3% in April. A three-year high, this is even more encouraging since the market has also been reporting consistent increases in home prices as available inventory continues to drop. With sales increasing, homebuilders will have greater incentive to begin new construction, which had slowed in the past months.

Another piece of economic news, which may not be good for the economy, may also be pushing shares higher. Since the recent comments from Fed Chairman Ben Bernanke, investors have been watching the labor market closely. Since Bernanke specifically mentioned improvements in the labor market as signs that the Fed might make changes to its current stimulus policy, positive news from that front has been received poorly. So this week's 10,000 jump in new unemployment claims may be driving the market higher as investors feel more at ease, knowing that the improvements the Fed is looking for haven't come yet.

Inside the Dow
Banks are reacting positively to the housing data this morning. Bank of America (NYSE: BAC  ) is up 1.82% and rival JPMorgan (NYSE: JPM  ) is enjoying a 1.45% gain. While JPMorgan was in the No. 2 spot for new mortgage business last year, following behind Wells Fargo's (NYSE: WFC  ) commanding 29% lead in the third quarter, banks have been seeing decreasing activity in that market. Both Wells and JPM noted in their first-quarter earnings presentations that they expected the lag in mortgage business to continue through the year. But with this week's mortgage application data showing that new mortgages are slowly representing more of the total application activity, these banks may be seeing new business walk through their doors in the coming quarters.

American Express (NYSE: AXP  ) is also enjoying the housing news, since an economic recovery would lead to more consumer spending. Up a more modest 0.98% this morning, the personal finance company is also enjoying a boost from Nomura Securities, which reaffirmed its buy rating of AmEx and increased its price target for the firm from $73 to $89 -- a 17% upside from yesterday's close.

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