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Wall Street on edge; Darden sells Red Lobster; Housing starts jumps

Hot Stock Minute

Wall Street was on edge after a two day sell-off, but investors received some new hope for a housing market recovery. The Commerce Department reported that home building jumped 13.2% to a seasonally-adjusted annual pace of 1.07 million units, up from 947,000 in March. The increase was fueled by a rise in multi-family units. Meantime, building permits, a gauge of future activity, rose 8% to a seasonally-adjusted annual rate of 1.08 million, the highest level in nearly six years.

A couple of multi-billion dollar deals surfaced on Friday. Darden Restaurants (DRI) said it would sell Red Lobster seafood chain to private equity firm Golden Gate Capital for $2.1 billion in cash. The deal will provide the company with $1.6 billion in net cash. It will use $1 billion to pay off debt and the remainder to buy back stock. Abbott Laboratories (ABT) said it would acquire Chile’s CFR Pharmaceuticals for about $2.9 billion. The deal will more than double Abbott’s generic drug portfolio in Latin America.

Retail was back in the forefront today. JCPenney (JCP) shares soared in early trading after the struggling retailer reported first-quarter same-store sales jumped 6.2% to $2.8 billion. This marks the second consecutive quarterly increase following a nine-quarter losing streak. Meanwhile, store traffic in April turned positive for the first time in more than two years.

Billionaire investors revealed their holdings for the first quarter in regulatory filings late Thursday. Warren Buffett’s Berkshire Hathaway increased its stake in Wal-Mart (WMT) by 17% to 58.05 million shares. It also added a new stake of 11 million shares in Verizon (VZ). But Berkshire Hathaway reduced its stakes in several other companies, including DirecTV (DTV) and General Motors (GM).

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