NEW YORK (Thomson Financial) - Shares of U.S. homebuilders rallied for a
third consecutive trading session Wednesday after Federal Reserve Chairman Ben
Bernanke said he expects U.S. growth to rebound next year as the housing market
stabilizes.
The iShares Dow Jones U.S. Home Construction ETF (ITB) rallied 5.8% to
$22.22, after gaining as much as 6% to $22.25, the highest level since Oct. 11.
Volume of about 2.1 million shares was above the fund's 30-day daily average of
1.1 million shares. Since the beginning of the year, the ITB ETF has risen about
26%.
The S&P Homebuilders SPDR (XHB) gained 3.2% to $24.17 and was up 25% on the
year.
In testimony to the Joint Economic Committee Wednesday, Bernanke provided a
somber assessment of the U.S. economy, saying the real gross domestic product
"will not grow much, if at all, over the first half of 2008 and could even
contract slightly."
However, the Fed Chairman added that he expects "economic activity to
strengthen in the second half of the year, in part as the result of stimulative
monetary and fiscal policies," and growth to "proceed at or a little above its
sustainable pace in 2009, bolstered by a stabilization of housing activity,
albeit at low levels, and gradually improving financial conditions."
Housing construction will continue to fall but the market for mortgages
conforming to the Fannie Mae and Freddie Mac standards have begun to recover,
Bernanke said.
Among individual issues, shares of Lennar Corp. rallied 4.5% to $22.34, D.R.
Horton Inc. gained 3.6% to $17.68 and Centex Corp. jumped 6.5% to $27.46.
Pulte Homes Inc. rose 3.8% to $16.03 and NVR Inc. added 2.3% to $639.36.
KB Home rallied 6% to $28.56 and MDC Holdings Inc. added 3% to $47.13.
Ryland Group tacked on 3.5% to $36.62. Beazer Homes U.S.A. Inc. jumped 6.5% to
$11.02.
Wanfeng Zhou
wz/vj
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