Stocks fall on housing data
Wall Street slumped Thursday after upbeat economic reports damped hopes that the Federal Reserve might cut interest rates this year.
The Dow Jones industrials fell for a fourth day, their longest losing streak since February.
Investors were initially enthusiastic after the Commerce Department said sales of single-family homes rose 16.2% last month after falling slightly in March.
In a separate report, the government said that April orders for goods meant to last several years rose 0.6%, the third straight monthly increase.
The data boosted optimism about the economy, pushing stock prices higher in the early going. The Dow Jones industrials rose nearly 100 points in the first hour of trading.
But as investors focused on the likelihood that economic strength would keep the Fed from easing credit, sellers began to swarm.
“Sometimes good is bad,” said Scott Fullman, director of investment strategy for Israel A. Englander & Co. “This takes away the anticipation that the Fed is going to ease interest rates because of the housing market.”
The Dow ended with a loss of 84.52 points, or 0.6%, at 13,441.13.
The Standard & Poor’s 500 index fell 14.77 points, or 1%, to 1,507.51. The index this week had been flirting with its all-time closing high of 1,527.46 reached in March 2000.
The technology-dominated Nasdaq composite index slumped 39.13 points, or 1.5%, to 2,537.92.
Losers topped winners by 4 to 1 on the New York Stock Exchange.
Interest-rate-sensitive stocks were among the day’s biggest losers. The Dow utility index tumbled 2.7%. A Bloomberg News index of real estate investment trust shares dropped 1.7%.
Analysts said some investors had been itching to take profits after the market’s powerful advance in recent months. The approach of the three-day holiday weekend also encouraged some to exit, experts said.
Stocks also have been wobbly since former Federal Reserve Chairman Alan Greenspan on Wednesday warned that the red-hot Chinese stock market was due for a pullback.
China’s Shanghai composite index lost 0.5% on Thursday, and many other emerging markets suffered deeper losses. The main Russian stock index fell 2.4%.
Latin American markets were hit by Greenspan’s comments and by Wall Street’s slide. Brazilian stocks plunged 2.5%.
Although Treasury bond yields rose early Thursday on the economic data, they pulled back as some investors sold stocks to buy bonds. The 10-year T-note yield ended at 4.84%, down from 4.85% on Wednesday.
Oil prices backed off a nine-month peak reached Wednesday as traders weighed a rebound in crude inventories last week. Crude oil futures fell $1.59 to $64.18 a barrel in New York.
In other market highlights:
* In the utility sector, Dominion Resources slid $2.32 to $86.87 and Edison International, parent of Southern California Edison, lost $1.81 to $57.26.
* Financial stocks also were broadly lower. Comerica fell 86 cents to $62.57, Merrill Lynch dropped $1.21 to $92.61 and Downey Savings lost $2.45 to $71.67.
* Housing stocks edged up on the home sales data. KB Home of Los Angeles rose 33 cents to $46.54. Toll Brothers added 30 cents to $30.07. Pulte Homes picked up 38 cents to $27.56.
* Bausch & Lomb surged $3.76 to $70.21 after Advanced Medical Optics confirmed it launched a takeover bid. Last week, Bausch & Lomb agreed to be acquired by private equity group Warburg Pincus for about $3.67 billion. Advanced Medical shares fell $1.34 to $41.10.
* Network Appliance plummeted $6.30, or 16.6%, to $31.76 after the storage technology company said sales and profit in the current quarter may fall short of analysts’ expectations.
* Mylan Laboratories fell 41 cents to $19.83 after costs tied to its takeover of Matrix Laboratories Ltd. hurt fiscal fourth-quarter results.
