U.S. home-building stocks rallied amid optimism the companies will report stronger-than-expected first-quarter earnings, helped by the still-vibrant housing market.

The Standard & Poor's home-building index was up 7% in early afternoon trading Thursday, while the S&P 500 index was off 1.3%. The home-building index-which tracks Kaufman & Broad Home Corp., Pulte Corp., and Centex Corp.-was up 19% over two days.

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