Housing Giants Indices Recover Ground

Merger and acquisition activities and a surge in home sales lifted Wall Street for our session ending May 31. The Dow industrials continued their climb higher, and the slow-stepping S&P 500 Index hit its first record close in seven years as our session came to an end, bolstered by the Fed minutes that showed the Fed's nod to the housing slump as a potential to lower interest rates.

Investors breathed a sigh of relief. "I think the worst is behind us," said Richard Yamarone, economist at Argus Research. "While we did have a miserable quarter in the first three months of the year, it doesn't look like it will be repeated any time soon."

The Housing Giants Builders' and Product Manufacturers' indices rose after the rough first quarter. The Department of Commerce released numbers that showed single-family homes rising 16.2 percent in April, the highest gain in 14 years. The Builders' Index gained 19.04 points, or 1.85 percent, and ended at 1,047.79. Advancing issues outpaced declining issues by a greater than 2-to-1 margin. The Product Manufacturers' Index had an even stronger outing, increasing 28.07 points, or 2.75 percent, and closing at 1,047.45, a high for the index. All 12 components tracked in the Manufacturers' Index gained this month.

Mohawk was the top dollar and percentage gainer in the Manufacturers' Index after the company was upgraded by investment research house Stifel Nicolaus. Company stock reached an all-time high of $108, though the stock retreated a bit at session's end. Analyst John Baugh upped his rating to "buy" from "hold," in part because of its purchase of Belgian laminate-floor maker Unilin in 2005. Mohawk added 11.90 points, or 13.20 percent, and ended at 102.06.

On the Builders' side, AvalonBay Communities jumped after brokerage firm Stifel Nicolaus upgraded its rating on AvalonBay and three other real-estate investment trusts. The firm upped its rating on AvalonBay to "buy" from "hold," and set a price target of $145, saying that along with the other firms, AvalonBay has a large development pipeline and that it is expected to outperform over the next few years. AvalonBay rose 8.13 points, or 6.65 percent, and was the top dollar gainer. AvalonBay closed at 130.39.

Shares of Fleetwood rose after an upgrade by Avondale Partners to "market outperform" from "market perform." Fleetwood increased 0.98 points, or 11.76 percent, and closed at 9.31. Fleetwood was the top percentage gainer this session.

NVR slipped after Banc of America Securities analyst Daniel Oppenheim cut his rating on the company to "sell" from "neutral" and cut his priced target to $680 per share, from $780, saying that sales and prices are sinking in the company's key markets in Baltimore and Washington, D.C. "In 2005, similar weakening trends in Washington preceded a 28 percent decline in the stock," Oppenheim said. NVR lost 27 points, or 3.28 percent, and was the top dollar loser. NVR ended at 797 even.