Ahmed Elbatrawy

Stocks get boost from U.S. housing data

NEW YORK (CNN Money) — U.S. stocks opened higher Wednesday, as investors welcomed strong U.S. housing data. But worries about political uncertainty in Greece kept the gains in check.

The Dow Jones industrial average (INDU) rose 32 points, or 0.3%, the SP 500 (SPX) added 5 points, or 0.4%, and the Nasdaq (COMP) climbed 7 points, or 0.3%.

While Europe’s debt crisis remains a concern for U.S. investors, hope that U.S. financial institutions have had ample time to protect themselves from the effects of a contagion are high. Investors are also optimistic that the U.S. economy will continue on the path toward recovery, despite a slowdown in Europe.

After politicians in Greece failed to agree on a coalition government, President Karolos Papoulias called for all parties to set up a caretaker government that will conduct new elections.

The instability in Athens raised questions as to whether the country would be forced to leave the eurozone and what such a move would mean for other troubled European economies.

News that Greeks were withdrawing hundreds of millions of euros unnerved investors but reports that the European Central Bank would continue funding the banks helped ease those worries.

Borrowing costs initially surged, with the Spain’s 10-year yield jumping to 6.5%, before pulling back to 6.25%. Italian bond yields also jumped to 6% before easing to 5.8%.

Also helping stem the pressure were comments from European leaders. German Chancellor Angela Merkel said she wants Greece to remain in the eurozone and will make every effort to help the nation get on solid footing. Spanish Prime Minister Mariano Rajoy also said it would be ‘a very big mistake’ if Greece were to exit.

U.S. stocks closed at three-month lows Tuesday as the eurozone debt crisis continued to take a toll on the markets.

World markets: European stocks were mixed in afternoon trading. Britain’s FTSE 100 (UKX) slipped 0.2%, while the DAX (DAX) in Germany rose slightly and France’s CAC 40 (CAC40) added 0.7%.

Asian markets ended lower. The Shanghai Composite (SHCOMP) fell 1.2% and Japan’s Nikkei (N225) dropped 1.1%, while the Hang Seng (HSI) in Hong Kong plunged 3.2%.

Economy: Housing starts jumped to an annual rate of 717,000 in April, from the revised level of 699,000 in March. Analysts surveyed by Briefing.com had expected a rate of 680,000.

Meanwhile, building permits fell to an annual rate of 715,000 in April, from the revised figure of 769,000 in March. Analysts expected permits to fall to 730,000.

The Fed’s reading on activity at the nation’s factory is due at 9:15 a.m. ET, with economists forecasting that industrial production rose 0.5% in April after being unchanged the previous month.

The latest report on crude inventories will be released at 10:30 a.m. ET, and minutes from the April meeting of the Federal Open Market Committee will be issued at 2 p.m. ET.

Companies: Facebook boosted the size of its IPO by 25%, seeking to raise up to $16 billion, according to an SEC filing.

Shares of retailer JC Penney (JCP, Fortune 500) tumbled after it reported a much bigger than expected loss for the most recent quarter. The company also discontinued its dividend.

Staples (SPLS, Fortune 500) reported earnings in line with expectations, but a surprise 1% drop in sales sent shares of the office supply company lower.

Shares of Deere Co. (DE, Fortune 500) were lower even after the company beat expectations on its quarterly results and raised its forecast.

Target Corp. (TGT, Fortune 500) also beat expectations and increased its forecast, pushing shares higher.

JPMorgan Chase (JPM, Fortune 500) moved higher Wednesday, a day after the bank held its annual shareholder meeting in Tampa, Fla., where shareholders approved pay packages for the bank’s top executive, and affirmed their wishes to keep Jamie Dimon in the dual role of chairman and CEO. The stock is down more than 12% over the previous five trading sessions.

According to documents filed with the SEC, Warren Buffett’s Berkshire Hathaway (BRKA, Fortune 500) built new positions in General Motors (GM, Fortune 500) and Viacom (VIA) during the first three months of 2012.

Currencies and commodities: The dollar dipped against the euro, but gained strength against the British pound and Japanese yen.

Oil for June delivery fell $1 to $92.98 a barrel.

Gold futures for June delivery lost $18 to $1,540.20 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury edged lower, pushing the yield up to 1.82% from 1.79% late Tuesday.  To top of page

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Ahmed Elbatrawy