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Jump in housing starts sends stocks higher

Associated Press

Published: Tuesday, June 19 2012 8:28 a.m. MDT

NEW YORK — U.S. stocks opened higher on better news on the housing front and on hopes that the Federal Reserve may come up with more plans to jumpstart the economy.

The Dow Jones industrial average was up 101 points at 12,844 in the first hour of trading Tuesday.

Microsoft was one of the biggest gainers in the Dow. The stock jumped 3 percent after the company announced a new tablet computer called Surface to compete with the immensely popular iPad from Apple. Microsoft was up 93 cents at $30.78.

The Standard & Poor's 500 index rose 13 points to 1,358. Eight of the 10 industry groups in the S&P rose. The technology-heavy Nasdaq composite index rose 32 points to 2,928.

American builders broke new ground on more single-family homes in May and requested more permits to build homes and apartments than they have in the past three and a half years. The increase suggests the housing market is slowly recovering.

The Commerce Department also said April was much better for housing starts than first thought. The government revised up the figures to 744,000 — the fastest building pace since October 2008.

Traders are also hopeful because of recent signals from the Federal Reserve that the central bank may come up with plans to stimulate the economy at its two-day meeting which starts Tuesday.

Economists say that even if the Fed does not act after its meeting, it will send a clear message that it is standing by to do so if needed.

Economic policymakers are meeting at a time of growing urgency in Europe with Greece locked in power-sharing talks and the continent's next potential trouble spot, Spain, facing an increasingly slippery path to recovery.

While there was some relief that conservatives in Greece won national elections over the weekend, the results were inconclusive and the potential for more trouble in Athens has roiled markets for two days.

Also Spain paid sharply higher interest rates in a short-term bill auction Tuesday, suggesting doubts about the country's ability to stand on its own.

Among other stocks making big moves:

— Oracle soared $1.38, or 5 percent, to $28.50 after the software maker surprised investors with the early release of its fourth-quarter earnings. The results beat Wall Street's forecasts, and the company said new software licenses increased sharply.

— J.C. Penney plunged $2.72, or 11 percent, to $21.63 after the chain store announced that Michael Francis, the former Target executive brought in to help redefine the company's brand, was leaving the company. It was the biggest loss of any stock in the S&P 500.

— Barnes & Noble fell 87 cents, or almost 6 percent, to $14.37 after the book store chain reported a wider loss than Wall Street was expecting. It also reported that its Nook e-reader sales fell 11 percent in the quarter.