Homebuilder stocks reacted positively to taper delay
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.