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Housing starts up 0.2% in January

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Economic news out this morning has the Commerce department reporting that housing starts grew 0.2% in January at an annualized rate of 1.85 million, which was the most since May 1986, and well above the 1.765 million rate forecasted by economists. Starts of new single-family homes rose about 2% to a 24-year high of 1.51 million.

While housing starts were on the rise, the more forward looking permits number showed building permits for new homes fell about 6% to 1.78 million, which was slightly below the 1.8 million forecast of economists. Building permits for single-family homes rose to a record 1.42 million.

Stock futures responded modestly negative to this morning's economic data with S&P futures (sp03h) extending marginal overnight losses to currently trade down 3.4 points at 848.20. NASDAQ futures (nd03h) are lower by 3.5 points at 1,015, while Dow futures are edging lower by 27 points at 8,020.

Futures action has traders looking at a modestly lower open as fair value for the S&P 500 today is $-0.11. That price will not change during the session. HL Camp & Company has their computers set for program buying at $0.73 and set for program selling at $-1.78.

While stock futures eased lower on this morning's economic data, Treasuries showed a slight gap higher in price at their open and showed modest upside after the housing starts and building permits were released. The 10-year Treasury March futures contract (ty03h) $115.030 +0.17% are higher as the benchmark bond's YIELD slips lower at 3.918%.

According to money-rates.com, the national average for a 30-year mortgage is 5.99% with 0.23% total points. A 15-year mortgage is at 5.39% with 0.22% total points.

Semiconductor stocks are showing mixed results this morning after last night's release of the industry's book-to-bill ratio for January of 0.92 was released. Intel (NASDAQ:INTC) $16.71 is extending overnight gains to $17.03 in pre-market trade and is this morning's most actively traded stock, while semi-equipment maker Applied Materials (NASDAQ:AMAT) $12.74 is lower by 10-cents at $12.64. The slight disparity between the two (manufacturer of chips vs. manufacturer of equipment to make chips) is that worldwide booking in January was $742 million and 15% above the $645 million in orders posted for January of 2002, while worldwide billing in January of 2003 rose just 1% to $806 million compared to January of 2002's billings of $800 million.

Programmable logic chip maker Xilinx (NASDAQ:XLNX) $22.09 is bid higher at $22.79 in this morning's pre-market after Morgan Stanley raised its view on the Semiconductor group to "attractive" from "in-line" on the view that the reward to risk parameters have become more attractive during the last few months. Morgan Stanley expects the universe of semiconductor stocks to outperform the overall market during the next 12-18 months and thinks Xilinx (XLNX) will be well positioned when a turnaround in the sector takes place. Morgan lifted its rating on Intel (INTC), Texas Instruments (NYSE:TXN) and Xilinx (XLNX) to "overweight" from "equal-weight."

Other actively traded stocks have internet incubator CMGI (NASDAQ:CMGI) $0.83 jumping 24% to $1.03 after Overture Services (NASDAQ:OVER) $22.79, which slides to $19.89 in pre-market trade, said it would buy AltaVista, a majority owned operating company of CMGI for $140 million in cash and stock.

Jeff Bailey

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