U.S. MARKET AVERAGES

Better-than-expected housing starts data and upbeat earnings news from Hewlett-Packard and Applied Materials sent stocks higher Thursday morning.

Shares of Dow component Hewlett-Packard rose 4.8% nearing a 5-year high on strong earnings report. The company posted 30% profit jump in Q1 on strong sales, beating estimates. The computer maker projected earnings for Q2 and 2006 above analyst consensus. Applied Materials, a supplier of chip-making equipment, gained about 1.6% after reporting Q3 net income above expectations. The company forecast Q4 profit below estimates.

J.C. Penney Co rose 3.5% on quarterly earnings which exceeded expectations. The retailer gave a positive outlook and said it would increase its dividend and buy back stock.

On the data front, housing starts rose sharply in January by 14.5% to a 2.276 million unit annual rate versus expectations of a 2.0 million unit pace. January construction growth marks the biggest jump in nearly 33 years.

A separate report showed initial jobless claims rose more than expected to 297,000 versus expectations of 285,000.

Strong earnings from Dow component Hewlett-Packard (HPQ: chart) led the computer hardware sector higher by 1.6%, reaching its highest level in about 2 weeks. The oil service sector climbed higher by about 1.2%. Housing stocks posted modest strength on the better-than-expected January housing starts data.

The HMO sector was one of the most notable movers to the downside in the early going with Amerigroup (AGP: chart) down 12% and leading the group lower on disappointing guidance for the next fiscal year.

The airline sector has ticked modestly lower in the early going, as traders take some profits from the substantial rally staged over the previous 2 sessions.

Wild Oats Markets (OATS: chart) stood out as one of the most notable gainers of the day, rising 16% on earnings and guidance.

Expedia (EXPE: chart)was one of the morning's worst performers on worse-than-expected earnings for the Q4. Shares of the travel website fell more than 16%.

In the opening minutes, the Dow Jones industrial average is up 17.75 at 11,076.72, the Nasdaq Composite Index has gained 9.03 to 2,285.46 and the Standard & Poor's 500 index has climbed 2.12 to 1,282.12.

MOVERS AND SHAKERS

Wild Oats posted Q4 net income of $3.3 million, or 11 cents a share, compared with a loss of $34.7 million, or $1.22 a share in the year-ago period. Net sales were $282.7 million, compared with $281.9 million in the prior period. Same-store sales rose 4.2%. Analysts expected a profit of 6 cents a share on sales of $294.1 million. The stock jumped 17.6%.

Expedia Inc (EXPE: chart), travel-services company, reported Q4 earnings drop of 43% to $25.2 million, or 7 cents a share from $44.1 million, or 13 cents a share a year ago. Excluding special items earnings came in at 20 cents a share compared with 27 cents last year. Revenue rose 13% to $494.7 million from $439 million, below estimates of revenue of $505 million. The stock dropped 15%.

Goodyear Tire & Rubber (GT: chart) posted a Q4 loss of $51 million, or 29 cents a share, down from a year-ago profit of $125 million, or 62 cents a share, missing estimates of net profit of 18 cents a share. Sales rose to $4.93 billion from $4.83 billion in the same period a year earlier.The company’s shares fell 4.2%.

ECONOMIC NEWS

Housing starts rose to their highest level in over 30 years in the month of January, according to a report from the Department of Commerce, with warmer than usual temperatures contributing to the growth.

The report showed that housing starts rose 14.5 percent to a seasonally adjusted annual rate of 2.276 million units in January from an upwardly revised 1.988 million unit rate in December. Economists had expected a more modest increase to a 2.0 million unit rate.

The increase in housing starts in January marked the biggest percentage increase since March of 1994, when starts rose 17.0 percent. With the increase, the pace of growth reached its highest level since March of 1974.