Horton and upbeat data lift housebuilders

Upbeat housing data as well as better than expected quarterly results from DR Horton sent homebuilder stocks sharply higher.

The S&P 500 homebuilder index rose 4.4 per cent on Tuesday.

DR Horton shares jumped 11.8 per cent to $23.82 after reporting quarterly profits more than doubled, thanks to improving house prices.

For the three-month period ending December 31, the company earned $66.3m on $1.23bn revenues, easily beating Wall Street’s estimates.

Rivals KB Home rose 2.9 per cent to $18.62 and Lennar added 1.8 per cent to $42.68.

The Standard & Poor’s/Case-Shiller home price index, which tracks house prices in 20 metropolitan regions across the US, showed record-low inventories that sent house values higher in November.

Overall, US equities markets shrugged off disappointing consumer confidence data and continued their recent upward march, bolstered by positive earnings from energy companies.

The January consumer confidence index dropped sharply to the lowest level since November 2011, indicating the first hit from the rise in payroll taxes.

“US equity markets seem to be very resilient, even after disappointing consumer confidence data,” said David Kelly, chief global strategist at JPMorgan Funds. “While this trend looks like it may continue, it’s important to recognise that this is a rally based on relative valuations rather than improving fundamentals,” he added.

The benchmark S&P 500 index closed up 0.5 per cent at 1,507.86, hitting a fresh five-year high. Most major sectors were trading in positive territory with energy and telecoms leading gains.

The Dow Jones Industrial Average closed 0.5 per cent higher at 13,954.57.

Ford shares fell in early activity even though the second-largest carmaker in the US reported quarterly results that beat analyst estimates.

The company said operating losses in Europe dragged on full-year net income, despite it gaining share in the North American market.

The company reported that net income declined 72 per cent to $5.66bn in 2012. Its shares dropped 4.6 per cent to $13.14.

Amazon shares were hit ahead of its quarterly earnings and closed 5.7 per cent lower at $260.35. Fourth-quarter earnings, released after the closing bell, were below analysts’ expectations, however, shares rose 9 per cent to $284.20 in after-hours trading, as investors welcomed the increase in the online retailer’s operating margins in North America.

Energy stocks rallied after positive earnings reports from the likes of Valero and Peabody.

Valero shares jumped 12.8 per cent to $43.77 after the world’s largest independent refiner by processing capacity reported a 20-fold profit rise in the fourth quarter. The company said it had net income of $1bn, well above analysts’ estimates.

Peabody shares also rallied, up 5.6 per cent to $26.56, as the coal miner’s quarterly profit beat consensus estimate.

Shares in Chesapeake Energy rose 9.4 per cent to $20.75 in after-hours trading, after the company announced that its current chief executive, Aubrey McClendon will retire on April 1, 2013.

Meanwhile, JC Penney attracted buyers, with the stock rising 9.3 per cent to $21.01, after the struggling department store retailer announced that it was restoring its discount programme to lure back shoppers.

The technology-heavy Nasdaq Composite finished marginally lower at 3,153.66 despite gains in its biggest component Apple .

Shares in the iPad and iPhone maker rose 1.9 per cent to $458.27, recovering some of the steep losses following disappointing results last week.

Yahoo shares climbed initially as the internet group’s quarterly profits, reported after the close on Monday, beat Wall Street expectations. The company reported revenues climbed 14 per cent to $427m, driven by growth in search advertising. However, shares reversed course and fell 3 per cent lower to $19.70.

Analysts at Nomura maintained their “neutral” rating on the stock. “While Yahoo’s shares have appreciated from the potential around the company’s capital returns and equity investments, we remain wary of the fundamentals and share losses, in particular in the display market.”

Shares in Seagate , data storage company, sold off, falling 9.3 per cent to $33.92 after quarterly earnings fell 13 per cent and margins deteriorated.