Summary: A jump in new home sales and a pledge by the head of the European Central Bank lifted stocks after a three-day fall; Citizens launch biggest bank IPO since crisis; Apple hit by #bendgate. Conway G. Gittens reports.
The S&P 500 bounces back from its worst three-day slump since April thanks to optimism in the United States and Europe. In the U.S., new home sales surged 18 percent to a six-year high in August. A welcome relief given Monday's data which showed an unexpected drop in sales of previously owned homes. KB Home, though, suggesting all is not well in the housing market. Quarterly results came in way below forecasts both in sales and profits. The homebuilder says selling prices were up, but blamed construction delays and delayed mortgage activity for pushing some sales into the next quarter. Patrick Newport of IHS Global Insight believes housing's contribution to overall economic growth is going to be muted. SOUNDBITE: PATRICK NEWPORT, U.S. ECONOMIST, IHS GLOBAL INSIGHT (ENGLISH) SAYING: "There is not much demand out there. The housing starts, single-family construction, has plateaued over the last 13 months. And the reason for that is, I think, because household formation hasn't grown that fast. So, I think, the story in housing is that it's a lot weaker, and the recovery will be a lot weaker than previously anticipated." Looking at how homebuilder shares performed: KB Home tumbling to four month lows. Toll, Lennar and Putle all finish to the downside. Citizens Financial Group making its debut on the New York Stock Exchange in the biggest IPO for a bank since the financial crisis. The spin-off of the Royal Bank of Scotland priced below the expected range in a sign investors are still not too hot on the financial sector, but the stock did perk up - rallying into the close. Apple shares bent a little over a YouTube clip showing a blogger bending the iPhone 6 plus with his hands. The blogger said he decided to see how easy the larger phone bends after reading complaints the device bends in the pockets of users. The phone has only been out for a few days and there are some other complaints. Some on Twitter say they can't upgrade to the new operating system iOS 8. No response from Apple as of yet. The stock is down close to one percent. In Europe, European Central Bank President Mario Draghi infuses life into the market after once again pledging to keep propping up the economy.