Stocks sag on housing outlook
Wall Street pulled back Thursday after new signs of weakness in the housing market prompted investors to look past a rebound in major retailers’ sales figures.
A weak forecast from Toll Bros., the nation’s largest builder of luxury homes, pressured housing stocks and rekindled concerns about whether the slumping housing market would hurt the economy. And European bank HSBC Holdings announced an increase in its provisions for soured mortgage loans, which hurt shares of U.S. banks.
Investors were hoping for news or data that would send stocks higher after days of largely meandering trading, but they didn’t find it in generally decent retail sales reports. Wal-Mart Stores, the world’s largest retailer, topped Wall Street’s forecast though the month’s increase was modest.
“I don’t think there is any one thing to point to as a catalyst but just the aggregation of a couple of small things,” Jack Caffrey, equity strategist for JPMorgan Private Bank, said of the day’s trading. “I think there is a growing recognition that we have come so far with a stutter or a stumble.
“There’s certainly not a sense of panic, and I think people still have an interest in buying if they can get an attractive entry point,” Caffrey said.
The Dow industrials fell 29.24 points, or 0.2%, to 12,637.63.
Broader stock indicators also fell. The Standard & Poor’s 500 index was down 1.71 points, or 0.1%, at 1,448.31, while the Nasdaq composite index fell 1.83 points, or 0.1%, to 2,488.67.
U.S. Treasury yields fell after an auction of 30-year bonds was met with solid interest, capping the government’s $38-billion refunding spree on a positive note.
Yields on benchmark 10-year notes were unchanged at 4.73%. The new long bonds were sold at a high yield of 4.81%, and found bids for 2.46 times the $9 billion on offer, well above an average of 2.14 in the last year.
Energy traders rushed back into the market amid frigid temperatures in the U.S. and after Occidental Petroleum shut a field in California after a fire. Crude oil futures rose $2 to $59.71 a barrel, its highest price this year on the New York Mercantile Exchange. Oxy rose 60 cents to $47.23.
The market seemed little moved by the Commerce Department’s report that wholesale inventories fell 0.5% to a seasonally adjusted $394 billion. Analysts expected an increase of 0.5%.
Similarly, investors appeared unfazed by a slight uptick in the number of people seeking unemployment benefits; the report indicated the job market remains solid. The Labor Department said 311,000 newly laid off workers sought benefits last week, an increase of 3,000 from the previous week.
In Europe, both the Bank of England and the European bank left interest rates unchanged, mirroring a decision by the U.S. Federal Reserve last week to stand pat on rates. The European bank hinted, however, that a rate hike might be in the offing.
In other market highlights:
* All four stocks debuting Thursday posted double-digit gains led by Accuray, which makes robotic medical devices. Shares of the company closed at $28.47, up 58%.
Shares of Israel’s Mellanox Technologies Ltd., which supplies semiconductors used to transfer data between computer servers and storage systems, closed at $20, up 17.7%.
Shares of Switch & Data, which provides connections to the Internet, closed at $19, up 11.8%.
National CineMedia, which runs an advertising sales and marketing business that uses movie screens and monitors in theater lobbies, closed at $25.67, up from $21.
* Worries about the housing market started with HSBC and Irvine’s New Century Financial, which both reported an increase in delinquencies and defaults in the sub-prime loan market for higher-risk borrowers. HSBC fell $2.44 to $89.78. New Century fell $10.92, or 36.2%, to $19.24.
* Toll Bros. fell $1.04, or 3%, to $33.39 after saying its first-quarter home-building revenue would fall by 19%. Hovnanian Enterprises, another builder, was off $1.55, or 4.3%, at $34.74.
* Walt Disney, which owns the ESPN and ABC television networks and its namesake theme parks, reported better-than-expected fiscal first-quarter earnings after the bell Wednesday amid strong DVD sales for its “Pirates of the Caribbean” films. Even so, Disney slipped 19 cents to $35.29.
* Electronic Data Systems’ fourth-quarter profit nearly doubled and contract signings, which help indicate how strong revenue will be in the future, rose sharply. The computer services company rose 84 cents, or 3.1%, to $27.92 after issuing a 2007 forecast that topped Wall Street’s expectations.
* Sales at Federated Department Stores, parent of Macy’s and Bloomingdale’s, handily beat Wall Street’s forecasts. January same-store sales increased 8.6%; Wall Street had been looking for a 4.6% rise. Federated rose $1.54, or 3.7%, to $42.86.
