Stocks fluctuate as new home sales fall

0
11

Stocks are fluctuating following news that sales of new homes posted a surprise drop for September.

The Commerce Department says new home sales fell 3.6 percent in September to a seasonally adjusted annual rate of 402,000 from a downwardly revised 417,000 in August.

Economists had expected a pace of 440,000. It was the first drop since March.

The Dow Jones industrials are down 4 at 9,878, after falling as much as 45 after the home sales report. The Standard & Poor’s 500 index is down 5 at 1,058, and the Nasdaq composite index is down 12 at 2,103.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

NEW YORK (AP) ? Stocks dipped in morning trading Wednesday as investors grow more cautious about the strength of an economic recovery.

The market is extending its losses after weakening Tuesday following a disappointing reading on consumer confidence. A new report showing durable goods orders rose in line with expectations in September had little effect on trading.

Stocks also fell overseas.

Roy Williams, CEO of Prestige Wealth Management Group, said it is normal to have a bit of a pullback after such a strong run, as investors take some profit and rebalance portfolios.

A disappointing earnings or economic report can give investors a reason to cash in some gains, but overall most signs point toward additional strengthening of the economy and market, Williams added.

The Commerce Department said orders to factories for items that are expected to last at least three years, like autos, computers and aircraft, rose 1 percent in September, matching economists’ expectations.

The biggest jump in demand for machinery in 18 months helped offset weakness in commercial aircraft and autos. It was the second increase in three months, a sign the manufacturing industry is likely at the beginning of a rebound.

In early morning trading, the Dow Jones industrial average fell 6.27, or 0.1 percent, to 9,875.90. The Standard & Poor’s 500 index declined 2.43, or 0.2 percent, to 1,060.98, while the Nasdaq composite index fell 8.77, or 0.4 percent, to 2,107.32.

The Commerce Department is also scheduled to release data on new home sales at 10:00 a.m. EDT. The report is expected to show sales jumped in September for the sixth straight month.

While another increase would be a welcome sign, housing sales are getting a boost from a tax credit for first-time buyers that expires at the end of November, so any increase could be tempered by the expectation that sales could slow after that incentive expires.

Economists predict sales increased 2.6 percent to a seasonally adjusted annual rate of 440,000.

In another sign the financial sector still might not be fully recovered, GMAC Financial Services is in talks with the Treasury Department for a third bailout. The auto and mortgage lender has been among the hardest hit financial firms by rising loan defaults and faulty credit markets.

The government already holds a 35 percent stake in GMAC after giving it $12.5 billion in bailout money.

Stocks mostly struggled again on Tuesday after a disappointing report on consumer confidence. The Conference Board said its consumer confidence index fell unexpectedly to 47.7 in October. Analysts predicted the reading would remain flat at 53.1.

The index declined to its second-lowest level since May.

Weak consumer strength is disconcerting heading into the holiday shopping season. Consumer spending accounts for more than two-thirds of economic activity and while corporate profits have been improving, investors are still waiting for a rebound in sales and revenue.

The Dow was able to edge out a small gain because of strength at IBM Corp. and rising energy stocks. However, the S&P and Nasdaq both declined Tuesday. The Dow rose 0.1 percent, while the S&P was off 0.3 percent and the Nasdaq tumbled 1.2 percent.

Stocks have mostly been declining in recent days, after hitting yearly highs early last week. A strengthening dollar and declining commodities prices have weighed on stocks.

Copyright 2009 The Associated Press.