Posted by
alfredlester on Wednesday, October 28, 2009 6:24:54 PM
Stocks fell on Wednesday as investors digested gloomy numbers on new-home sales and were unmoved by a report that showed a rise in United States durable goods orders.
The number of newly constructed homes with committed buyers was put at a seasonally adjusted annual rate of 402,000, the Commerce Department said, falling short of the 440,000 projected by economists. That marked a decrease of 3.6 percent in projected sales from August to September &<51; the first drop in five months. Analysts had expected new-home sales to increase by 2.6 percent, encouraged in part by a economic recovery program that awards first-time home buyers an $8,000 tax credit.
New-home sales have implications for the construction job market as well as consumer spending on items like furniture and appliances.
Stocks were down all day, but selling accelerated in the final hours of trading. By the end of the day, the Dow Jones industrial average was down 119.48 points, or 1.21 percent, at 9,762.69. The Standard &&8; Poor&S217;s 500-stock index was off 1.95 percent to 1,042.63 and the Nasdaq was 2.67 percent lower at 2,059.61. Stocks in energy companies and those producing materials like metals and paper goods drove the decreases.
Josh Shapiro, chief United States economist for MNR, a financial advisory firm, said the housing data showed that recovery would be slow and that housing prices might fall again.
&S220;It&S217;s still a very dicey environment,&S221; he said. &S220;There&S217;s still a lot of looming supply out there, particularly in the upper and middle price range.&S221;
The government released a report showing a 1 percent rise in orders for durable goods in September &<51; the second increase in the last three months. The jump met expectations, but total orders were still down 24.1 percent compared with a year ago, a sign that economic renewal may be slow to materialize.
Durable goods, which include long-lasting items like refrigerators and planes, offer a window into the health of the manufacturing industry and provide a preview of how busy factories will be in the months ahead free credit report instantly. Increases in durable goods orders can lead to more jobs and are considered central to the growth of the economy.
Some analysts discounted the importance of the durable-goods numbers, saying the increase was largely anticipated and not market-shaking. But Cliff Waldman, an economist for the Manufacturers Alliance/MAPI, an economic research group, said the data suggested manufacturing would be slow to take off again.
&S220;It paints a clear picture of a weak-kneed recovery,&S221; he said. &S220;There&S217;s no aggressive, entrepreneurial, animal-spirits kind of investment.&S221;
Financial stocks were down slightly as news that GMAC Financial Services was seeking a third round of bailout financing from the United States government spread through the market.
At the close of trading, the price of crude oil was at $77.26 a barrel, down from $79.55 on Tuesday.
Traders were looking ahead to Thursday, when the government will report gross domestic product figures, which provide a hint of how quickly the economy is growing by measuring the total value of all goods and services in the economy. Wall Street analysts are expecting an annual growth rate of 3.2 percent, although on Wednesday, Goldman Sachs slashed its projection to 2.7 percent from 3 percent.
Overseas, the Nikkei stock average in Japan closed 1.35 percent down at 1,0075.05. European markets also tumbled, with the FTSE 100 in London ending down 2.32 percent, the DAX in Germany index falling 2.46 percent, and the CAC-40 in France closing down 2.14 percent.
Stocks Decline on Economic News