Reports Reverse Upward Momentum
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U.S. stocks had their worst week since July as disappointing reports on housing and durable goods raised concern that the market's record six-month rally has outpaced the prospects for an economic recovery.
Shares of most of the Dow Jones industrial average's 30 companies lost ground as sales of new homes rose less than forecast and demand for goods that are made to last for several years unexpectedly fell.
Bank of America dropped 5.8 percent and American Express lost 4.9 percent as the Federal Reserve said it will cut the size of two programs meant to bolster credit markets. Commodity producers declined as crude oil and metals prices retreated.
The Standard & Poor's 500-stock index fell 2.2 percent, to 1044.38, as all 10 of its industry groups declined. The Dow Jones industrial average lost 155.01 points, or 1.6 percent, to 9665.19. The Nasdaq composite index slid 2 percent, to 2090.92.
The indexes closed at their highest levels of the year on Sept. 22.
"Over the last six months, we've had a huge, huge rally," said E. Keith Wirtz, chief investment officer at Fifth Third Asset Management, a Cincinnati firm that oversees $20 billion. "It wouldn't be unusual at all for this market to show some churn a bit, some pullback from this great run that we've had."
The companies in the S&P 500 traded at 19.7 times their profits from continuing operations over the past year on Sept. 18, the most expensive level since 2004.
The yield on the benchmark 10-year Treasury note dropped 16 basis points, to 3.31 percent. The Treasury will auction $30 billion of three-month bills and $29 billion of six-month bills on Monday. They yielded 0.12 percent and 0.2 percent, respectively, in when-issued trading. The Treasury will sell one-month bills Tuesday.
-- Bloomberg News
