The Dow Is Propelled Higher by Housing Data and Hope for QE

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Blue-chip stocks are largely higher this afternoon on the heels of better-than-expected housing data and reduced anxiety over the outcome of the Federal Reserve's upcoming monetary-policy meeting. With roughly an hour left in the trading session, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is up by 73 points, or 0.48%.

Positive data pointing toward an ongoing recovery in the housing market continued to trickle in today. The National Association of Home Builders, a nonprofit industry trade group, said this morning that its members are more confident about the condition of the housing market than they've been in seven years. The association's Housing Market Index came in at 52 this month, signaling that a majority of homebuilders view the market as "good" as opposed to "poor." This was the first time since April of 2006 that the monthly reading exceeded 50.

Separately, a survey of manufacturing activity by the Federal Reserve Bank of New York suggested that the economy in the Northeast region of the U.S. picked up this month. Its Empire State index rose to 7.8 in June from -1.4 in May -- a reading greater than zero indicates expansion, while a negative number suggests contraction. According to an economist quoted by MarketWatch, "The Empire survey echoes the recent improvement in consumer sentiment where all the improvement was driven by future expectations while current conditions deteriorated."

Empire State Manufacturing General Business Conditions Index Chart

Empire State Manufacturing General Business Conditions Index data by YCharts.

Finally, ahead of what my colleague Alex Dumortier calls "the only event that matters this week," investors and analysts no longer seem worried that Fed's two-day meeting will result in a tapering of support for the economy. As Alex noted, "Key data available since May 22 do not support a tightening in monetary policy right now; in particular, the core Personal Consumption Expenditures index (which excludes food and energy), the Fed's preferred gauge of inflation, registered in April its lowest annual increase since its inception in 1959, at 1.05%!"

In terms of individual stocks, shares of Cisco Systems and Microsoft are among the Dow's leading stocks this afternoon, up by 2% and 1%, respectively. While the former announced that it's opening an innovation center in Israel and the latter launched a Windows app for iPhones, the ascent of both stocks is more likely tied to the positive broad-market sentiment.

Meanwhile, shares of Verizon (NYSE: VZ  ) and AT&T are among the handful of blue-chip stocks trading in the red at the time of writing. Analysts are speculating that the downward trend is being fueled by rumors that Verizon may move into the Canadian wireless market. As Fool Matt Thalman discussed earlier: "The Canadian government is hoping that a fourth mobile player in the country will help keep prices low and offer citizens a wider range of choices. One report indicates that Verizon is looking at Wind Mobile, a small Canadian wireless company."

As a general rule, acquisitions often lead to value destruction and could spur competitors -- e.g., AT&T -- to follow suit.

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