Stocks Slide on Weak Housing Report
Thursday, August 24, 2006
Stocks had their biggest drop in three weeks, as a plunge in sales of previously owned homes heightened concern that the economy is headed for a slump.
The S&P 500-stock index slid 5.83, or 0.4 percent, to 1292.99, the biggest decline since Aug. 1. The Dow Jones industrial average lost 41.94, or 0.4 percent, to 11,297.90. The Nasdaq composite index fell 15.36, or 0.7 percent, to 2134.66.
Sales of existing homes fell last month to the lowest in more than two years, and the number of unsold homes set a record, the National Association of Realtors reported. The data followed comments Tuesday by Michael Moskow, president of the Federal Reserve Bank of Chicago, that a decline in housing may pose a risk to the economy. A Commerce Department report on new-home sales is due today.
"Housing is a relatively important number and clearly an area that has been a driver for the economy, and now we're trying to figure out if the Fed is done or if it needs to do more," said John Caldwell, chief investment strategist for McDonald Investments, the securities unit of KeyCorp in Cleveland.
U.S. home-builder stocks, already trading near yearly lows as housing sales remain depressed this summer, pulled back after the housing data was released. KB Home, a home builder, and Realogy, the country's biggest residential real estate broker, led declines in the S&P 500.
KB Home slumped $2.66, to $40.53. The home builder said it was reviewing some stock options awarded to its chief executive, Bruce Karatz.
Pulte Homes , the biggest U.S. home builder by market value, retreated $1.02, to $28.09.
Realogy , owner of the Century 21 and Coldwell Banker real estate brokerage firms, fell $1.07, to $20.23.
Weyerhaeuser rose $1.32, to $61.35, after agreeing to combine its fine-paper business with Domtar in a $3.3 billion deal.
Internet Security Systems jumped $1.62, to $27.62. International Business Machines agreed to buy the company for about $1.3 billion in cash.
Gateway jumped 23 cents, to $1.95, after an unsolicited $450 million offer for its retail operations.
New York Stock Exchange composite index fell 44.05, to 8320.19.
American Stock Exchange index fell 7.27, to 2001.21.
Russell 2000 index of smaller-company stocks fell 9.34, to 698.42.
NYSE: 1.97 billion shares, down from 1.99 billion. Decliners outnumbered advancers 13 to 6.
Nasdaq: 1.49 billion shares, down from 1.6 billion. Decliners outnumbered advancers 2 to 1.
Crude oil for October delivery: $71.76, down 134 cents.
Gold for current delivery: $623.70 a troy ounce, down from $624.60 on Tuesday.