* April's fewer housing starts seen as positive
* Vix volatility index at 8-month low
* Home Depot Q1 profit beats, but stock drops
* Dow up 0.3 pct; S&P 500 up 0.6 pct; Nasdaq up 0.7 pct
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(Updates to early afternoon)
By Edward Krudy
NEW YORK, May 19 (Reuters) - U.S. stocks moved higher on
Tuesday as investors bet that April's slide in U.S. housing
starts and permits signaled that the housing market may soon
stabilize as the supply of new homes dwindles.
U.S. housing starts and permits fell unexpectedly to record
lows in April, hitting shares in some residential construction
companies such as Centex Corp <CTX.N>, down 2.5 percent to
$9.60, but leaving sentiment largely intact in sectors such as
technology, retail and energy.
International Business Machines <IBM.N>, up 1.2 percent to
$105.79, and Hewlett Packard <HPQ.N>, up 3 percent to $36.79,
were the top boosts to the Dow Jones industrial index, while
the PHLX Semiconductor index <.SOXX> added 1.8 percent. Hewlett
Packard is set to report quarterly results after the bell.
Analysts said while the housing data pointed to more
headwinds in the sector, less new construction should bode well
for the market in the long run as home inventories fall.
"Housing starts coming down can almost be seen as
progress," said Linda Duessel, market strategist at Federated
Investors in Pittsburgh. "We've got to keep the housing starts
off because there's still too many houses, there are still way
too many vacant homes that need to be sold."
Stability in the U.S. housing market is seen as key to
restoring consumer confidence and stemming the flow of
foreclosures that have hit financial institutions.
The Dow Jones industrial average <> added 28.51 points,
or 0.34 percent, at 8,532.59. The Standard & Poor's 500 Index
<.SPX> gained 5.27 points, or 0.58 percent, at 914.98. The
Nasdaq Composite Index <> rose 12.05 points, or 0.70
percent, at 1,744.41.
U.S. stocks recovered more than half of their losses on
Monday, following their worst week in two months, on the back
of stronger-than-expected results from Lowe's Cos Inc <LOW.N>.
The S&P 500 has climbed from a 12-year closing low on March
9, rising 37.4 percent through the close on May 8. But the
benchmark index gave up some ground last week amid
profit-taking and disappointment with April retail sales.
On Tuesday, the Chicago Board Options Exchange Volatility
index <.VIX>, also known as Wall Street's "fear gauge," fell
below 30 for the first time in eight months, extending a
pullback from the bear market lows of early March.
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Shares in energy companies rose as oil continued to push
towards $60 per barrel. Exxon Mobil Corp <XOM.N> rose 0.5
percent to $70.86, while the S&P energy index <.GSPE> rose 0.8
percent. Front-month crude added 1.3 percent to 59.84 per
barrel.
Retailers also posted advances, with the S&P retail index
up 0.6 percent. Department store Saks Inc <SKS.N> climbed 24
percent to $5.08 after posting better-than-expected results,
helped by cutting costs.
Home Depot also posted a stronger-than-expected quarterly
profit, but its shares fell 4.6 percent to $24.82, making the
stock the Dow's top drag. Investors said the results were
disappointing compared to rival Lowe's.
Shares of American Express Co <AXP.N> fell 2.4 percent to
$25.50, a day after the credit card company said it will cut
4,000 jobs, or 6 percent of its workforce, as it grapples with
rising customer defaults.
JPMorgan Chase & Co <JPM.N> Chief Executive Jamie Dimon said
the No. 2 U.S. bank expected to repay some government bailout
money in a couple of weeks. The stock was off 0.8 percent to
$36.99.
On Nasdaq, shares of Apple Inc <AAPL.O>were a top boost,
rising 1.6 percent to $128.71, as shares of big-cap technology
companies advanced ahead of HP's results.
Separately IBM's Chief Financial Officer Mark Loughridge
told a Reuters Technology Summit in New York that the
technology services giant expects margins to improve this
year.
(Editing by Padraic Cassidy)
