Stocks recoil on gloomy housing, economic data

Stocks retreated Tuesday in muted holiday-week trading as another round of reports showed further deterioration in the housing market and broader economy.

The Dow Jones industrial average finished lower for the fifth straight session, falling 100 points.

The Commerce Department said Tuesday that sales of new homes fell in November to the slowest pace in nearly 18 years, with their prices dropping by the biggest amount in eight months. And the National Assn. of Realtors said sales of pre-owned homes fell at an 8.6% annualized rate in November from October’s level, more than analysts expected.

The government also confirmed that the economy contracted in the third quarter at an annual rate of 0.5%, unchanged from the department’s last estimate.

The batch of gloomy data was hardly surprising to jaded investors. And the market’s movements this week may be skewed by light volume. Many traders have been on vacation for Christmas. The market will close early today, at 10 a.m. PST.

“It is a very quiet news week, and much of it has already been priced into the market,” said Ryan Larson, head of equity trading at Voyageur Asset Management.

The Dow Jones industrial average dropped 100.28 points, or 1.2%, to 8,419.49. The average is off 400 points, or 4.6%, this month and down 37% this year. And the market declines this week leave little room for a hoped-for year-end rally.

Broader indexes also declined Tuesday. The Standard & Poor’s 500 index fell 8.47 points, or 1%, to 863.16. The Nasdaq composite index fell 10.81 points, or 0.7%, to 1,521.54. The Russell 2,000 index of smaller companies fell 6.43 points, or 1.4%, to 468.64.

Declining issues led advancers by 3 to 2 on the New York Stock Exchange.

In other market highlights:

* Shares of American Greetings fell $3.42, or 35%, to $6.40 after the greeting-card company posted a third-quarter loss because of hefty charges and a decline in sales.

* The dollar was mixed against other major currencies, while gold prices fell.

* The yield on the 10-year Treasury note rose to 2.16% from 2.14 on Monday.

* Oil prices fell on continuing concerns that the global economic slowdown is evaporating demand for energy. Crude futures fell 93 cents to settle at $38.98 a barrel on the New York Mercantile Exchange.

* In overseas markets, key stock indexes rose 1.6% in Japan and 0.2% in Britain. Shares fell 2.7% in Hong Kong, 0.2% in Germany and 0.7% in France.