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Builders, banks remain a bright spot in trading

HW 30 finishes in positive territory

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The HW 30 ended the day in positive territory, up 0.38%, with the majority of the companies feeding off higher gross domestic product figures and a decline in jobless claims. While markets posted small gains, the Dow Jones Industrial Average slid on concerns of a serious military conflict in Syria.

This negative sentiment eased somewhat during Thursday trading, allowing the the HW 30 Index – an index of mortgage finance and housing stocks – as well as the Nasdaq and S&P 500 to close on a positive note.

Here’s an amplified view of how the HW 30 played out:

In the aftermath of bobbing mortgage rates, banking giants seemed to feed off the volatility in rates, with JPMorgan Chase (JPM) and Bank of America (BAC) up 0.24% and 0.35%, respectively.  Wells Fargo (WFC) remained steady and unchanged by day's end.

"Interest rates are coming back so that’s good news for the banks," explained Odeon Capital Group financial analyst Andrew Gadlin.

He added, "Their net interest income has been sliced down next to nothing because of low interest rates, but with rates coming back, they’ll begin to make a margin again."

On a similar note, homebuilders are feeding off the housing recovery.

D.R. Horton (DHI), Lennar Corp. (LEN), PHH Corp (PHH) and Toll Brothers (TOL) all rose on Thursday, up 3.55%, 3.16%, 0.66% and 0.55%, respectively.

Home repair retailers Home Depot and Lowe’s also finished the day a bit higher, up 0.03% and 0.09%, respectively.

The most surprising sector turned out to be mortgage real estate investment trusts, or mREITs.

On Thursday, American Capital Agency (AGNC), Annaly Capital Management (NLY) and Redwood Trust (RWT) ticked up, posting gains of 1.66%, 2.64% and 2.62%, respectively.

"Stocks were up sharply earlier and at the same time bond yields were lower, which is a huge positive for the housing industry," said Odeon Capital Group head of corporate trading Robert Grimm.

He concluded, "I think that rates are going to keep rising with the 10-year treasury around 3% by year end and approaching 4% by the end of 2014 which will put a damper, at least for a while on the housing industry."

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