U.S. stocks open in the green territory after housing data; Fed minutes on tap

U.S. stocks opened higher Wednesday ahead of minutes from the Federal Reserve. Market players were also evaluating data from the U.S. housing market, as well as comments from Federal Reserve officials.

The Dow Jones Industrial Average opened 29 points, or 0.2%, higher at 17,518, while the S&P 500 index was up 5 points, or 0.3%, at 2,056. The Nasdaq Composite Index started up 19 points, or 0.4%, to 5,005.

Shares of Norfolk Southern Corp. jumped 5.6% after Canadian Pacific Railway Ltd. on Tuesday proposed a merger to create a transcontinental railroad company with potential for stronger earnings growth.

Earlier, Federal Reserve Bank of New York president William Dudley said he did not expect a huge surprise or big market reaction when the rise does happen.

And Cleveland Fed president Loretta Mester said the US economy could now handle a modest 25 basis point increase.

Meanwhile, Federal Reserve Bank of Atlanta President Dennis Lockhart, who supported a rate increase in September but backed consensus for standing pat the following month, has said there is more data to evaluate before deciding whether to raise rates in December.

U.S. housing starts in October fell to a seven-month low as single-family home construction in the South dropped. Meanwhile, a surge in building permits suggested the housing market remained robust.

The U.S. Commerce Department said on Wednesday that groundbreaking dropped 11% to a seasonally adjusted annual pace of 1.06 million units, the lowest since March.

Still, October was the seventh consecutive month that starts stayed above 1 million units, the longest streak since 2007, suggesting a sustainable housing market recovery.

The sector is supported by rapidly rising household formation, mostly driven by young adults leaving their parental homes and a tightening labor market.

While residential construction accounts for only over 3% of gross domestic product, housing has a broader reach in the economy, with increasing home prices boosting household wealth and thus buoying consumer spending.

Housing has added to GDP growth in each of the last six quarters and is eclipsing some of the slowdown from a weak manufacturing sector.