Investors began buying into a housing recovery Tuesday, sending builder stocks higher as a rise in bank stocks also helped kindle an aggressive rally.
But with financials, energy and housing-related stocks setting the early pace as fears over European debt contagion eased somewhat, the morning's trading looked solid.
Wall Street also got some help from Europe: A report showed German business optimism rising unexpectedly and as Spanish short-term financing costs fell sharply.
A break-up of the euro would be “absurd” and “unthinkable,” Vitor Constancio, Vice-President of the European Central Bank (ECB), told CNBC in an interview, the latest attempt by the ECB to dampen speculation that the single currency may not survive the region’s debt crisis after its most difficult year since being introduced.
Yields on three and six-month Spanish treasury bills fell sharply and demand surged in an auction on Tuesday, with analysts saying, according to Reuters, that banks were waiting to tap into an ECB three-year liquidity offer on Wednesday to pay for the higher-yielding Spanish bonds.
Closer to home, housing starts and building permits both rose sharply in November, data that reinforced recent numbers showing gains in builder sentiment and increases in sale prices.
Home builder stocks jumped on the news, with Lennar [LEN 19.48 
The gain in starts came primarily from apartment buildings, but there still was enough in the numbers to provide encouragement that the sector is recovering.
"Looking ahead to 2012, we believe residential investment will be a net positive to growth next year due to the two bright spots of the construction sector: multifamily building and renovations," Michelle Meyer, economist at Bank of America Merrill Lynch said in a note.
Source: CNBC. http://www.cnbc.com/id/45736868
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