The stock markets took a dive on Friday, the 20th anniversary of the Black Monday market crash of 1987, but fears that the market would tank again Monday were alleviated as traders erased a 100-point drop in the Dow at the market opening. By midday, stocks were trading up marginally, and the builder stocks were staging a rally.
The Dow Jones Industrial Average was up nearly 27 points by 1 p.m., and the the S&P SPDR home builders exhange traded fund was up 5.7% to $22.07. Individual builder stocks were up across the board, except for TOUSA, which was down to 65 cents per share, and Weyerhaeuser, which was off a bit more than 2%. Avatar, NVR and Standard Pacific were up in double digits, with the rest of the group trading up between 3% and 9%. Much of the gain was attributable to short-position covering, but there were rumors floating around the Street that one or more members of the builder group was about to announce a strategic investment from outside the building industry.
The market turnaround followed a big decline in stocks on Friday, caused largely by the sudden realization among traders and analysts that corporate earnings were not going to keep pace with the lofty estimates they had been working with.