by Marc Bastow | September 19, 2012 5:20 pm
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 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) and KB Home (NYSE:KBH) gained over 2% on Wednesday, while home-improvement retailers Home Depot (NYSE:HD) and Lowe’s (NYSE:LOW) 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) rallied up more than 13% as the company announced a mobile payments platform to allow merchants to accept credit card payments by using swipers on Apple (NASDAQ:AAPL) iPhones or iPod Touches.
Earnings news drove much of the rest of the market. General Mills (NYSE:GIS) rose 2% after reporting quarterly earnings of 66 cents per share that just beat Street expectations. The company is also bringing back marketing icons The Jolly Green Giant and the Cheerios Kid to boost its marketing efforts.
AutoZone (NYSE:AZO) also reported better-than-expected earnings, 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) 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), ConAgra (NYSE:CAG), Rite-Aid (NYSE:RAD), and CarMax (NYSE:KMX).
Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing, he was long AAPL.
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