Investors' attention routinely vacillates between domestic and international events, and today's stock market action shows that dynamic clearly. Even though news from Cyprus is still at the forefront of investors' minds, attention returned to the domestic front today, as a positive report on housing starts and permits helped lift the Dow Jones Industrials (DJINDICES:^DJI) 15 points by 10:55 a.m. EDT. Broader markets posted modest losses, however, reflecting investors' concerns about what the Federal Reserve may do with interest rates as it meets today and tomorrow.
Within the Dow, Bank of America (NYSE:BAC) is the biggest gainer, up 2%. Clearly, positive news on the housing front has a big impact on B of A and its substantial presence in the mortgage-lending industry. But the bank will also be looking closely at what happens in Cyprus as negotiations move forward that could protect small depositors from a bank deposit tax in favor of pinning larger depositors with more of the loss burden. Bank of America needs the world financial system to stay healthy for it to keep recovering.
Elsewhere, Hovnanian (NYSE:HOV) has jumped 4.2% on the favorable news from the housing market. Hovnanian in particular has seen impressive share-price gains over the past year as the housing recovery has strengthened, but at some point the homebuilder will need to start working its way back to profitability amid better conditions. Otherwise, investors will conclude that the stock has gotten ahead of itself, and it will give up some of its huge recent gains.
Finally, Walgreen (NASDAQ:WBA) has soared 5.9% on a positive earnings report, with generic-drug sales helping the drugstore chain beat analyst estimates. In addition, Walgreen has decided to change drug-distribution companies. Until now, the drugstore chain had used Cardinal Health, but this morning Walgreen said it would take an initial 7% stake in competing firm AmerisourceBergen (NYSE:ABC), with warrants that would allow Walgreen to build its position in the company to 23% in the future. For its part, Amerisource soared 7% on the news, while Cardinal took a 7% hit.