Builders Show Strength As Stocks Wobble

Stocks wobbled Wednesday as a lot of the financial-driven steam from the prior session's rally appears to have evaporated.

Pockets of strength emerged in housing, semiconductors, retail and energy.

Homebuilders, which have taken a beating in 2007, have been among the leading gainers this year.  The sector could get another boost from proposed legislation that could deliver billions of dollars to homeowners facing foreclosure.

A Reuters/Bridge index of homebuilders has jumped nearly 30 percent this year, led by gains of more than 70 percent (year to date) in shares of land developer AMREP and builders M/I Homes and Hovnanian . 

Even home-improvement retailers are benefiting from a turnaround, with shares of Home Depot touching $30 a share, up 20 percent from where it was a month ago. Lowe's is up about 15 percent in the past few weeks.

As for Wednesday's market action, Centex and KB Homes posted notable gains.

Micron Technology shares jumped ahead of the chip maker's earnings, due out after the closing bell.

Chip makers were up all day, even as the broader market sputtered. The Philadelphia Stock Exchange semiconductor index was up 0.8 percent.

American depositary shares of Research In Motion ticked higher ahead of the Canadian company's fourth-quarter earnings, due out after the closing bell. The company, which makes the BlackBerry e-mail device, has offered a range of 66 to 70 cents a share, but there is an abundance of optimism about RIM and analysts think earnings will come in on the top end of that range.

Apple's iPhone , while dazzling, isn't yet considered serious competition for the BlackBerry in the corporate world as it lacks security features that the BlackBerry has.

Retail stocks posted solid gains Wednesday after electronics retailer Best Buy reported its net declined but beat expectations. Same-store sales slipped 0.2 percent as a decine in U.S. sales offset strength overseas.

Energy stocks advanced, with Dow components ExxonMobil and Chevron up 2 percent and 1.5 percent, respectively. Earlier, the EIA reported that crude inventories unexpectedly rose last week by 7.4 million barrels, more than three times the expected increase, to 319.2 million barrels.

General Motors was the top gainer on the Dow Jones Industrial Average. The auto maker a day earlier posted a 19 percent decline in March auto sales but said it expects the U.S. economy to recover in the second half. In a conference call following the monthly sales report, GM sales analyst Mike DiGiovanni said he saw "early signs" that the U.S. market was steadying.

In testimony on Capitol Hill, Federal Reserve Chairman Ben Bernanke warned that the economy may shrink in the first half of this year. He said much of the "necessary economic and financial adjustment has already taken place" but was unclear on whether the door was still ajar for further rate cuts.

The Fed chairman said he doesn't see any other investment banks suffering the same fate as Bear Stearns. In defending the central bank's decision to jump in to bail out Bear Stearns, Bernanke said the Fed felt it had no choice as the investment bank's outright collapse would've rippled through the financial sector and markets.

"Normally, the market sorts out which companies survive and which fail, and that is as it should be," Bernanke said in prepared remarks delivered to the congressional Joint Economic Committee. "However, the issues raised here extended well beyond the fate of one company." (Read the full text of Bernanke's testimony.)

Analysts are closely watching Merrill Lynch