The Dow Jones Industrial Average (^DJI 0.44%) is up after homebuilder confidence surged in June. As of 1:15 p.m. EDT the Dow is up 153 points, or 1.02%, to 15,224. The S&P 500 (^GSPC 0.88%) is up 0.96% to 1,642.
There were two U.S. economic releases today.
|
Report |
Period |
Result |
Previous |
|---|---|---|---|
|
NAHB Housing Market Index |
June |
52 |
44 |
|
Empire State Index |
June |
7.8 |
(1.4) |
The National Association of Home Builders' Housing-Market Index measures homebuilder confidence. A level of more than 50 indicates that more builders see conditions as positive rather than negative, and in June homebuilder confidence rose past 50 for the first time since April 2006!
NAHB/Wells Fargo US Housing Market Index data by YCharts.
Homebuilder confidence hit a low of eight in January 2009, recovered to about 20, and then began steadily rising in late 2011. During the downturn, many builders stopped building homes altogether. With little new supply of homes and many homeowners reluctant to sell due to being underwater on their mortgages, inventory of homes for sale is low. As such, NAHB chairman Rick Judson commented, "With the low inventory of existing homes, an increasing number of buyers are gravitating toward new homes." New-home construction is positive for the economy, as it employs a significant number of people and spurs on many other industries.
Today's Dow leader
Today's Dow leader is Cisco (CSCO -0.04%), up 3.2% to $24.85 -- a new 52 week high. Cisco announced today that it has opened an innovation center in Israel in collaboration with Pelephone Communications focused on mobile-networking services. Cisco expects worldwide mobile data-consumption to increase 13-fold by 2017, so it's working to provide the best solution for telecom companies to effectively manage their networks.
However, the main reason Cisco is up today is that semiconductor and networking stocks as a whole are gaining. Among them, Micron Technology is leading the way, up 5.2%. For its part, Cisco has been slowly rising since it reported better-than-expected earnings on May 16. Investors have been drawn to the networking company and its low P/E ratio of 13.4, rock-solid balance sheet with more than $5 per share in net cash, and 2.8% dividend yield.
