Stocks gained at the open Tuesday, looking to recover from two days of losses, as investors tried to shrug off worries over Cyprus and following a better-than-expected housing starts report.
The Cypriot parliament is due to vote on the measure on Tuesday afternoon. The specter of default looms ever larger for the country as lawmakers look set to reject the plan. The country's banks remained closed and trade on the island's stock exchange was also suspended till Thursday.
The Dow Jones Industrial Average opened higher, led by Bank of America and Boeing, after logging its first two-day decline in nearly a month.
The S&P 500 and the Nasdaq also gained at the open. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded below 13.
All key S&P sectors opened in positive territory, led by financials and utilities.
Stocks on the Cyprus exchange have been on a steep slide, falling more than 11 percent in 2013 and 63 percent over the past year though the market there actually rose 3 percent Monday.
"It is an explosive political situation," Nick Spiro, head of Spiro Sovereign Strategy, told CNBC. "This is a rubicon which should have never been crossed...This bailout agreement has Germany's political fingerprints all over it."
European shares traded lower on the uncertainty over the bailout, but Asian shares recovered some ground after Monday's sell-off.
On the economic front, housing starts gained 0.8 percent in February to a 917,000-unit annual rate, while new permits for construction jumped to the highest level since 2008, according to the Commerce Department. Economists had expected a reading of 915,000.
Most homebuilders traded higher following the report, including KB Home and Toll Brothers.
Meanwhile, the Federal Reserve's Open Market Committee starts its two-day meeting and investors will be watching for any signs that the central bank could start winding down its quantitative easing program. A decision will follow on Wednesday afternoon.
Among earnings, DSW tumbled after footwear retailer missed earnings and revenue expectations.
Walgreen gained after drug distributor AmerisourceBergen signed a 10-year distribution contract with the drugstore chain and associate Alliance Boots GmbH. Meanwhile, Cardinal Health, which used to be the primary branded drug provider to Walgreen, dropped sharply following the news. In addition, Walgreen posted better-than-expected earnings, helped by improved gross margins.
Skullcandy soared after the headphone maker appointed former Nike executive Hoby Darling as its new CEO. And Electronic Arts edged higher following news that CEO John Riccitiello would be stepping down from his helm at the game maker.
Lululemon tumbled after the yoga-apparel maker said it will withdraw shipments of unexpectedly sheer women's yoga pants from its stores. The company said the move will likely affect its bottom line.
?By CNBC's JeeYeon Park (Follow JeeYeon on Twitter:@JeeYeonParkCNBC)
? 2013 CNBC LLC. All Rights Reserved
Source: http://www.nbcnews.com/business/wall-street-advances-after-strong-housing-data-1C8932487
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