US stocks and housing starts jump

US stocks gained for a second day yesterday. Bloomberg reports:

U.S. stocks rallied, sending the Dow Jones Industrial Average to its best two-day gain in almost six years, after JPMorgan Chase & Co.'s profit topped estimates and falling oil prices sparked an advance in consumer shares...

The S&P 500 jumped 14.96 points, or 1.2 percent, to 1,260.32. The Dow added 207.38, or 1.9 percent, to 11,446.66, bringing its two-day rally to 4.4 percent. The Nasdaq Composite Index rose 27.45, or 1.2 percent, to 2,312.3. More than two stocks climbed for each that fell on the New York Stock Exchange.

It has been a nice bounce, but in terms of points, the 484-point gain in the Dow over the past two days is less than the 546-point gain seen over 27-28 November last year, which then represented a 4.3 percent rise.

In the real economy, housing looks likely to remain a drag despite yesterday's headline number on housing starts. Bloomberg reports:

Builders started work in June on the fewest single-family U.S. homes since 1991...

Construction starts fell to an annual pace of 647,000, the Commerce Department said today in Washington. A change in New York City building codes spurred total starts, which include condominiums and apartment buildings, to a four-month high...

Total housing starts rose 9.1 percent to a 1.066 million pace from a revised 977,000 rate in May. Economists forecast a 960,000 reading in June, from a previously reported 975,000 for May, according to the median on 76 projections in a Bloomberg News survey...

Building permits rose 11.6 percent to a 1.091 million rate in June. Excluding multifamily applications in the Northeast, permits would have risen 0.7 percent.

Other reports gave mixed signals.

The Philadelphia Fed's general economic index was minus 16.3 in July, lower than forecast, compared with minus 17.1 in June. Negative readings signal a decline, and the measure averaged 5.1 last year. The index of prices paid climbed to 75.6, the highest level since 1980, from 69.3...

A separate government report showed initial claims for unemployment benefits rose less than forecast last week. Claims increased to 366,000 from 348,000 the prior week, the Labor Department said.