Wall St slides on weak housing data
Wall Street went into a nosedive on Thursday as a weaker-than-expected report on the US housing market raised fresh fears about an economic recovery and ended a rush into banking stocks. Record losses reported by Ford Motor Co, forced to step up its restructuring, also contributed to the negative tone in the market.
The Dow Jones Industrial Average sank 283.19 points (2.43 percent) to close at 11,349.28 and the Nasdaq composite shed 45.77 points (1.97 percent) to 2,280.11. The broad-market Standard & Poor's 500 index retreated 29.65 points (2.31 percent) to 1,252.54. Losses intensified as the National Association of Realtors reported US home sales fell another 2.6 percent in June to a 10-year low as inventories rose and prices fell with buyers still hesitant in the face of a horrific market slump.
The seasonally adjusted annual rate of 4.86 million units is 15.5 percent lower than in June 2007. "Right now, we don't have enough data to argue that conditions (in the housing market) have bottomed," said Joel Naroff at Naroff Economic Advisors. "And that is something that could cause equity investors to worry as the financial problems will not ease until housing has turned." Peter Kreztmer at Bank of America added, "To a market looking for evidence of a bottom in the sales pace, the report disappointingly indicated that the downtrend is continuing for now."
Crude oil futures rebounded, gaining 1.05 dollars to close at $125.49 a barrel in New York. The S&P banking index slid some 7.2 percent, leading the declines. Among key financial groups, Citigroup slumped 9.7 percent to 19.06 dollars and Bank of America shed 2.8 percent to 30.64. Among other key stocks, Ford skidded 15.5 percent to 5.11 dollars after reporting its worst quarterly loss ever at 8.7 billion dollars and new transformation efforts while warning that it does not see a US economic recovery until 2010.
Elsewhere, 3M rose 0.35 percent to 71.05 dollars as the maker of industrial and consumer products reported a rise in profit and revenue. Amazon.com rallied 11.6 percent to 78.72 dollars after surprising the market with a stronger-than-expected profit of 158 million dollars. Dow Chemical fell 3.3 percent to 33.11 dollars as its earnings came up short of expectations. Southwest Airlines fell 6.2 percent to $14.90 as traders focused on the industry's woes from high fuel costs and shrugged off a better-than-expected profit report.
Bonds rose sharply. The yield on the 10-year US Treasury bond fell to 4.016 percent from 4.148 percent Wednesday while that on the 30-year bond eased to 4.611 percent against 4.700 percent. Bond yields and prices move in opposite directions. In Europe, shares also fell sharply as weak economic reports pointed to more trouble on that side of the Atlantic. London's FTSE fell 1.61 percent and France's CAC 40 skidded 1.38 percent. The Frankfurt DAX index retreated 1.46 percent.
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Source:ET
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