Dow Drops 50 As Existing Home Sales Slide
Tuesday August 23, 7:43 pm ET
By Ellen Simon, AP Business Writer
Dow Ends Down 50, Nasdaq Drops 4 As Existing Home Sales Slide, Oil Prices Rise Slightly
NEW YORK (AP) -- Investors retreated Tuesday, sending stocks moderately lower as existing home sales slid and volatile oil prices intensified Wall Street's summer malaise.
The market's opening selloff continued after the National Association of Realtors said sales of previously owned homes dropped 2.6 percent in July as mortgage rates crept up. Even with the decline, sales were the third-highest level on record.
ADVERTISEMENT
The latest snapshot of housing activity suggested that the sizzling housing market may be cooling slightly. Investors have been closely watching home sales, worried that the housing boom is nearing its end. A contraction could hurt consumer spending, since a raft of home equity loans have put cash in consumers' pockets.
Still, in late August trading, it doesn't take much to bring stocks down. No major economic reports are due this week, most companies' second-quarter earnings are out and many investors are on vacation, said Michael Sheldon, chief market strategist at Spencer Clarke LLC.
"We're not seeing a lot of conviction, either by buyers or sellers, so far this week," Sheldon said. Of the 10 sectors in the Standard & Poor's 500, only one, the materials sector, moved a shade more than 1 percent.
The Dow Jones industrial average fell 50.31, or 0.48 percent, to 10,519.58.
Broader stock indicators were also down. The Standard & Poor's 500 index fell 4.14, or 0.34 percent, to 1,217.59, and the Nasdaq composite index fell 4.16, or 0.19 percent, to 2,137.25.
Bonds rose as stocks fell, with the yield on the 10-year Treasury note at 4.18 percent, down from 4.22 percent late Monday. The U.S. dollar was down against other major currencies. Gold prices were higher.
Traders also worried as oil prices first rose, then fell. The volatility did not please equity investors, who are concerned that higher gasoline prices are curbing consumer spending. On Saturday, Wal-Mart Stores Inc., the world's largest retailer, said its third-quarter results would miss analysts' expectations due to rising oil prices. A barrel of light crude settled at $65.71, up 6 cents, on the New York Mercantile Exchange.
"We started the year at $42 a barrel oil-- that was a concern, but we could get past it," said David Sowerby, chief market analyst, Loomis, Sayles & Co. "When we crossed $60, I don't think anyone could question what $60 is going to do to retail sales."
Merck & Co. continued to fall, dropping 31 cents to $27.58 after Friday's $253.4 million verdict against the company in the first of 4,200 suits claiming Merck knew of problems with its Vioxx painkiller long before it pulled the drug from the market in September.
Discount retail chain Target Corp. fell 4 cents to $56.10 after it said August sales in stores open at least one year -- a key performance gauge known as same-store sales -- would hit the high end of a projected range of 4 percent to 6 percent. In the year-ago period, Target's same-store sales rose 1.8 percent.
Williams-Sonoma Inc. fell 44 cents to $40.29 after the retailer, which also owns the Pottery Barn and West Elm brands, said its earnings rose about 12 percent in the second quarter, and the company reiterated guidance for the full year. The company said it will increase catalog circulation in its emerging brands such as West Elm, and will be operating additional retail stores.
La-Z-Boy Inc. fell 42 cents to $13.57 after first-quarter sales fell from the year ago period and it slashed its quarterly guidance. Chief Executive Kurt Darrow said "fierce competition" for consumer spending, including employee pricing deals from carmakers, contributed to weak demand.
Wal-Mart fell 33 cents to $46.34 as an alliance of unions said it plans to step up organizing efforts at the company beyond its U.S. base, focusing first on the mega-retailer's employees in South Korea. Union Network International, a federation of unions in 150 countries, said it plans to launch organizing efforts by year's end in South Korea and is also looking to target Wal-Mart in countries including Mexico, Argentina and Brazil.
Declining issues led advancers by more than 9 to 7 on the New York Stock Exchange, where consolidated volume was 1.72 billion shares, up from 1.66 billion Monday.
The Russell 2000 index of smaller companies fell 2.00, or 0.3 percent, to 655.47.
Overseas, Japan's Nikkei stock average rose 0.16 percent. Britain's FTSE 100 fell 0.34 percent, Germany's DAX index dropped 0.48 percent, and France's CAC-40 slipped 1.10 percent.
New York Stock Exchange: nyse.com
Nasdaq Stock Market: nasdaq.com
|
