by Marc Bastow | September 19, 2012 5:20 pm
[1]A stronger-than-expected report on existing home sales combined with a steep drop in oil prices helped move the markets forward with at least a little conviction on Wednesday.
Housing starts and permits rose substantially[2] to an annual rate of 750,000 in August, up 29% from last year while sales of previously occupied homes climbed 7.8% from a year ago, according to the National Association of Realtors.
While not all share the upbeat sentiment, homebuilders have become increasingly bullish — a confidence index from the National Association of Home Builders reached its highest level since June 2006.
Housing-related stocks moved higher after the existing home sales report. Homebuilders Lennar (NYSE:LEN[3]) and KB Home (NYSE:KBH[4]) gained over 2% on Wednesday, while home-improvement retailers Home Depot (NYSE:HD[5]) and Lowe’s (NYSE:LOW[6]) both rose over 1%.
Meanwhile, oil prices fell more than 4% Wednesday to $91.25 a barrel, its lowest level since August, as Middle East fears eased and the latest U.S. government report showed a greater buildup in crude inventories than expected.
The net result was a broader rally, with the Dow rising 0.1% to 13,577, the S&P up 0.12% to 1,461 and the Nasdaq the big winner with a 0.15% gain to end at 3,182.
Shares of Groupon (NASDAQ:GRPN[7]) rallied up more than 13% as the company announced a mobile payments platform to allow merchants to accept credit card payments[8] by using swipers on Apple (NASDAQ:AAPL[9]) iPhones or iPod Touches.
Earnings news drove much of the rest of the market. General Mills (NYSE:GIS[10]) rose 2% after reporting quarterly earnings of 66 cents per share[11] that just beat Street expectations. The company is also bringing back marketing icons[12] The Jolly Green Giant and the Cheerios Kid to boost its marketing efforts.
AutoZone (NYSE:AZO[13]) also reported better-than-expected earnings[14], though same-store sales fell below forecasts; AZO shares traded up more than 3% on the day.
Shares of restaurant chain Cracker Barrel (NASDAQ:CBRL[15]) soared more than 5% as the company announced strong earnings, raised its quarterly dividend 25%, announced a new $100 million share repurchase plan and provided analysts with positive forward guidance.
Thursday’s earnings releases include Oracle (NASDAQ:ORCL[16]), ConAgra (NYSE:CAG[17]), Rite-Aid (NYSE:RAD[18]), and CarMax (NYSE:KMX[19]).
Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing, he was long AAPL.
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