The dollar traded lower against the better-yielding euro and Australian dollar on Tuesday as stocks found their footing off the better-than-expected number for February housing starts.
Housing starts increased 22.2% in February after plunging 14.5% in January, the Commerce Department said today. Construction of single-family homes climbed 1.1% to a 357,000 annual rate. Work on multifamily homes, such as apartment buildings, condos and co-ops, surged to a 226,000 pace from 124,000 in January, led by an 89% surge in the Northeast. Technology shares rallied and financial stocks continued their recent bounce.
Apple jumped 3.4% after unveiling the third version of the iPhone operating system, adding long-requested features such as cutting and pasting and giving software developers new ways to make money on their applications. Shares of Citigroup and JP Morgan Chase were up 4.3% and 6.1% respectively even after banking analyst Meredith Whitney warned on profits. Bank of America declined about 2%.
At Tuesday’s close of floor trading on the NYSE, the DOW was on 7395.70 with a gain of 178.73 points (2.48%) while the S&P finished on 778.12, up 24.23 points (3.21%). The technology-heavy NASDAQ closed on 1462.11 after rising 58.09 points (4.14%). The dollar traded in mostly in risk-acceptance mode as stocks edged higher in N.Y. On the day, the greenback ended up with a loss of 0.34% to the euro and 0.30% on Australia's currency while it gained 0.15% on sterling and 0.33% against the yen.
Treasuries were sold as stocks traded higher. Yield on the 2-year note gained 3.2 basis points to 1.032% while yield on the 10-year note rose 5.0 basis points to 3.004%.
Crude for March delivery was recently trading up $1.52 (3.21%) to $48.85 per barrel.
Gold for April delivery was recently trading down $5.0 (-0.54%) to $916.60 per ounce.
Lawrence Summers, the chairman of President Obama's Council of Economic Advisors, said today that the administration will be "as creative as we can" in their efforts to get back at least some of the $165 million in bonuses that AIG paid to executives, including the derivative traders.
"What the President's made clear, what our Administration's doing," he added, "is being as creative as we can with a group of lawyers working on this problem, using recoupment authority, employing other means to do everything we can within the law to address this situation. We're not going to just abrogate the law, we're not going to abrogate contracts, we're not going to do things that would put the whole economy at risk."
Summers also said the administration planned to create a "systemic risk regulator" to oversee banking and market problems that could threaten the economy.
"We are going to be pushing very hard for a so-called 'resolution regime,'" he said. "A system that will enable the government to intervene when a big financial company gets in trouble in the future, like the FDIC does with banks, and take the necessary steps to make the thing work, to make the people who should bear the responsibility actually bear the responsibility. That's the approach we're going to take."