Stocks Creep Higher; Housing Starts Beat Estimates

In the wake of Tuesday's steep sell-off, U.S. stocks rose to start trading on Wednesday, Jan. 19, following upbeat news from the housing industry. Meanwhile, Treasury yields and oil prices rose yet again.

Housing starts beat estimates to rise to a seasonally adjusted annual rate of 1.70 million units in December, up from a revised 1.68 million units in November, the Commerce Department reported. Permits for future homebuilding also rose to a rate of 1.87 million units in December, up from a revised 1.71 million units in November.

Oil prices rose to a seven-year high as an outage on a pipeline from Iraq to Turkey increased concerns about tight supplies. Light sweet crude climbed to nearly $87 per barrel. The euro rose against the dollar, and cryptocurrencies edged higher.

Companies releasing earnings on Jan. 19 include Bank of America Corporation (BAC), Morgan Stanley (MS), The Procter & Gamble Company (PG), and United Airlines Holdings, Inc. (UAL). Shares of Bank of America had fallen yesterday in the wake of disappointing results from other banks but surged more than 3% in pre-market trading after the bank reported results that topped estimates.

Stocks tumbled on Jan. 18 as weak quarterly results from The Goldman Sachs Group, Inc. (GS) and other financial heavyweights weighed on shares of financial firms. Shares of tech companies also fell, as Treasury yields rose to their highest levels in two years. The Dow Jones Industrial Average (DJIA) fell 1.5%, the S&P 500 lost 1.8%, and the Nasdaq dropped 2.6%. The yield on the 10-year Treasury note hit 1.86%.

Quick Hits: Today's Headlines

Shares of Sony Group Corporation (SONY) fell more than 7% on concerns about competition in the video game business, after Microsoft announced its acquisition of Activision Blizzard, Inc. (ATVI) yesterday.

The stock price of SoFi Technologies, Inc. (SOFI) is soaring after the company got approval from its two key regulators to become a bank holding company. The move could allow the fintech company to lend at more competitive rates and give SoFi customers higher-yielding accounts.

Peloton Interactive, Inc. (PTON) is adding hundreds of dollars in fees for setup and delivery charges related to some of its exercise equipment. The at-home fitness company has been hit by slowing demand for its stationary bike and treadmill products.

AT&T Inc. (T) and Verizon Communications Inc. (VZ) have agreed to defer turning on some wireless towers near airports to avoid disruptions to U.S. flights. President Biden said that this will help avoid "potentially devastating disruptions."

The Biden administration is reportedly reviewing whether the cloud business of Alibaba Group Holding Limited (BABA) poses a risk to U.S. national security. The focus of the probe will be on how the company stores U.S. client data, including personal information and intellectual property, and whether the Chinese government could gain access to it.

United Airlines is expected to report a quarterly loss when it releases its fourth quarter earnings later today. However, the focus will be on how the carrier is dealing with the omicron variant's impact on its operations and how it will affect the outlook for business and international travel.

Kinder Morgan, Inc. (KMI) is expected to post a jump in fourth quarter adjusted profit, as higher demand for natural gas is projected to boost the U.S. pipeline operator's volumes. Investors and analysts will look for comments on Kinder Morgan's energy businesses and outlook for demand.

Used Car Prices Add Fuel to Inflation: The Big Story

Soaring used car prices are fueling inflation. Over the past 20 years, inflation from used cars had averaged zero—but that figure recently surged to over 1% year over year, according to data from the Bureau of Labor Statistics.

In December, consumer prices for goods and services rose 0.5%, while prices for used cars and trucks climbed 3.5%. Cox Automotive reported that the average retail price for a used vehicle hit a new record of over $28,000 in December. And since used car prices usually rise in the spring, Cox expects prices to continue rising.

Prices of used cars and trucks were responsible for almost one-quarter of the monthly increase in consumer prices in December, making them the second biggest driver of the change after housing.

The primary cause for the used car price spike? The shortage of semiconductors that cut inventory of new cars has spilled over to the used car market, pushing up prices there. Put another way: if you don't have new vehicles, you can't have used vehicles.