For Immediate Release
Chicago, IL – December 20, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the D.R. Horton, Inc. ( DHI- Free Report), Lennar Corporation ( LEN- Free Report), Toll Brothers ( TOL- Free Report), Meritage Homes Corporation ( MTH- Free Report) and SPDR S&P Homebuilders ( XHB- Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free .
Here are highlights from Thursday’s Analyst Blog:
Housing Stocks in a Festive Mood
Dec 18 turned out to be a great day for homebuilders. Shares of top homebuilding companies rose on Wednesday after the Federal Reserve promised to keep interest rates low for some time despite its plans to start tapering its stimulus plan from January. The Fed will cut down its current $85 billion a month bond buying program by $10 billion to $75 billion.
The Fed was until now buying $85 billion in government bonds and mortgage backed securities every month, known as quantitative easing, to keep interest rates low and boost economic growth. In July, Fed chief delayed tapering of the bond purchases to keep interest rates low for some more time.
Since then, some investors have been expecting a reduction in the economic stimulus program before year end. Fed Chairman Ben Bernanke and company stated that the slowly improving economy and the lowered unemployment levels were responsible for the decision to start scaling down the bond buyback program. The U.S. unemployment rate fell to a five-year low at 7% in November.
Ideally, tapering of the bond-buying plan would have led to adoption of a tighter monetary policy, which would have increased interest rates further. However, Fed said that the federal funds rates (benchmark interest rates) will be kept low for even longer than previously promised, irrespective of the reduction in the bond buying program.
Stocks of large homebuilders like D.R. Horton, Inc. ( DHI- Free Report), Lennar Corporation ( LEN- Free Report) and Toll Brothers ( TOL- Free Report) as well as smaller ones like Meritage Homes Corporation ( MTH- Free Report) rose on the Fed’s decision to keep interest rates low. Prices of these companies rose in the range of 3%-7% as homebuilding stocks are most sensitive to the outlook of interest rates.
High interest rates dilute demand for new homes, as mortgage loans become expensive; thus lowering a buyer’s purchasing power. This can hurt volumes, revenues and profits of homebuilders. Homebuilders have largely benefited from historically low interest rates, eventually leading to the sharp increase in home buying activity since mid-2012.
However, since May, mortgage/interest rates are edging upward to more normalized levels. The housing momentum seen in 2012 and in the first half of 2013 had slowed down in the past 3-4 months, hurt by the recent spike in mortgage rates, rising home prices, tight credit availability and by political uncertainty in Washington.
Thanks to Bernanke’s decision to keep the benchmark interest rates low for quite some time, homebuilders were among the biggest winners on the day yesterday.
The broader housing market also enjoyed a strong rally and the SPDR S&P Homebuilders ( XHB- Free Report) gained 3.0%. Moreover, the Dow Jones and S&P 500 index surged to record highs. However, U.S Treasury prices went down.
Further, strong housing data released in the week also pushed share prices of homebuilders.
Yesterday, data published by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau showed that November housing starts surged to their highest in nearly six years. Further, data published by The National Association of Home Builders (:NAHB) showed that the homebuilder sentiment index rose for the seventh consecutive month in December, showing that the recent interest rate hikes have not dampened the housing recovery.
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
Get the full Report on DHI - FREE
Get the full Report on LEN - FREE
Get the full Report on TOL - FREE
Get the full Report on MTH - FREE
Get the full Report on XHB - FREE
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
For Immediate Release