Tuesday's Stock Market Open: US Equities Open Narrowly Mixed On Strong Housing, Manufacturing Data

U.S. stocks drifted higher on Tuesday as some unexpectedly strong housing and manufacturing data in the U.S. were offset by worries the U.K. may leave Europe without securing a trade deal with the European Union.

The Dow Jones Industrial Average rose 81.69 points to 28,317.58 while the S&P 500 added 3.62 points to 3,196.07 and the Nasdaq Composite Index rose 2.33 points to 8,816.56.

Housing starts climbed 3.2% to a seasonally adjusted annual rate of 1.365 million units in November, the Commerce Department said Tuesday. Economists had expected housing starts to rise to 1.345 million units in November.

Housing starts surged 13.6% on a year-over-year basis in November.

Homebuilding permits rose 1.4% to a rate of 1.482 million units in November, the highest such level since May 2007, due to low mortgage rates.

“Housing is an economic bellwether and its recent strength is further encouraged by the strength we’ve seen in manufacturing, as those two industries are typically related,” said Mike Loewengart, vice president of investment strategy at E-Trade Financial. “But critical to the health of housing is ongoing trade tensions.”

The Federal Reserve said manufacturing production rose 1.1% in November following downwardly revised 0.7% drop in October. Also, industrial output gained 1.1% in November after a downwardly revised slip of 0.9% in October.

Economists had expected overall manufacturing output would increase only by 0.7% and industrial output would edge up 0.8% in November.

Meanwhile, capacity utilization rose by 0.7% to 77.3% in November up from a downwardly revised 76.6% in October.

The U.S. Bureau of Labor Statistics reported Tuesday that on the last business day of October, the number of job openings rose by 4.6% to 7.3 million from the prior month. The biggest increases in job openings levels were in retail trade (+125,000), finance and insurance (+56,000), and durable goods manufacturing (+50,000).

Over October, hires and separations were little changed at 5.8 million and 5.6 million, respectively.

The pound sterling was under pressure after the newly elected government of Boris Johnson said it will not extend the Brexit transition period beyond the end of 2020, raising fears the U.K. could leave the European Union without having secured a trade deal with the bloc.

Andy Scott, associate director at financial risk adviser at JCRA, an independent risk advisor, said: "By outlawing an extension, it leaves very little time in which to agree a comprehensive free trade agreement with the EU and means the clock is now ticking down to a firm cliff edge next December.”

Scott added: “Markets are reminded that Boris Johnson's promise to leave the EU is something he intends to fulfill, possibly without negotiating an amicable future relationship."

Minneapolis Federal Reserve President Neel Kashkari told the Chamber of Commerce in Rochester, Minnesota, on Monday night: "Right now, I'm not seeing evidence of pressures that would warrant raising interest rates further.”

Overnight in Asia, markets finished mixed. The Hang Seng gained 1.22% while Japan’s Nikkei-225 rose 0.47% and China’s Shanghai Composite jumped 1.27%.

European markets finished mixed as the FTSE 100 edged up 0.08% while Germany's DAX fell 0.89% and France's CAC 40 slipped 0.39%.

Crude oil futures gained 1.13% to $60.89 per barrel and Brent crude was up 1.1% at $66.06. Gold futures inched up 0.02%.

The euro gained 0.06% at $1.153 while the pound sterling dropped 1.6% at $1.3122.