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Homebuilder stocks reacted positively to taper delay

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Homebuilder stocks posted their greatest reaction to the Fed deciding not to taper last week, with both KB Home (KBH) and Lennar Corp. (LEN) leaping by 9.6% and 6.6%, respectively, in the last two hours of the trading session, The Wall Street Journal reported.

When the Federal Reserve showed itself to be a taper tiger last week, one of the sharpest reactions came from homebuilding stocks. For example, KB Home and Lennar Corp., which both report quarterly earnings Tuesday, leapt by 9.6% and 6.6% in the last two hours of the trading session, respectively.

Profits are rising for homebuilders, too, of course. KB is seen earning 21 cents a share for the period through August compared with four cents a year earlier, and Lennar is seen earning 45 cents versus 40 cents, according to FactSet. But earnings will have to get a lot better to compensate for stock gains before 2013.

Source: WSJ
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