Associated Press
Friday, July 25, 2008

NEW YORK, July 24 -- Wall Street abruptly ended an earnings-driven rally and closed sharply lower Thursday after a steeper-than-expected decline in existing-home sales and worries about the financial sector chilled the market's recent optimism. The major indicators fell about 2 percent, including the Dow Jones industrial average, which lost more than 280 points.

The National Association of Realtors said sales resumed their decline in June after a slight rebound in May. Existing-home sales declined 2.6 percent in June, well beyond the 1 percent drop economists had forecast.

Investors punished shares of home builders and financial companies because of the declining housing market.

The Dow fell 283.10, or 2.43 percent, to 11,349.28. The Standard & Poor's 500-stock index fell 29.65, or 2.31 percent, to 1252.54. A jump in Amazon.com shares helped contain some of the decline in the technology-heavy Nasdaq composite index, which fell 45.77, or 1.97 percent, to 2280.11.

Stocks had risen in the prior two sessions as the price of oil declined. Oil is now down more than $20 after just weeks ago hitting a record above $147 a barrel. A barrel of light, sweet crude rose $1.05 to settle at $125.49 on the New York Mercantile Exchange.

Financial stocks declined again after rising sharply in the past week from their recent lows. Washington Mutual fell as concerns persisted about the company's mortgage portfolio. The nation's largest thrift this week posted a $3 billion loss because of increases in its loss reserves to cover souring loans in its mortgage holdings.

Fannie Mae and Freddie Mac fell sharply after rallying earlier in the week on legislation speeding through Congress that would grant the Treasury Department power to extend the government-sponsored mortgage companies an unlimited line of credit and to buy an unspecified amount of their stock, if necessary.

Washington Mutual fell 62 cents, to $4.03.

Citigroup fell $2.06, to $19.06.

Lennar fell $2.47, to $11.07.

Amazon.com jumped $8.18, to $78.72.

Bristol-Myers rose 23 cents, to $22.12.

Fannie Mae lost $2.98, to $12.02.

Freddie Mac gave up $1.99, to $8.81.