Inflation is low, earnings are high, investors are happy. Stocks shot higher Tuesday, giving the market its biggest gain in a month. Results at Mattel, Goldman Sachs, and Johnson & Johnson were all above expectations.
U.S. homebuilders are growing less pessimistic about the housing market, despite tighter lending standards that have slowed home sales. The National Association of Home Builders/Wells Fargo builder sentiment index rose four points to 25 in January. That's the highest level since June 2007. It's just the third time the index has been at 20 or above in two years.
The Mortgage Bankers Association said mortgage applicatins dropped 10.5% last week, the biggest drop in four months. Elsewhere -- housing starts and homebuilder confidence -- signs are more hopeful. But the mortgage mess could be a spoiler.