Mortgage activity data showed that U.S. mortgage applications fell for a second consecutive week, reflecting a drop in demand for home purchase and refinancing loans even as interest rates sank. The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended Aug. 24 decreased 4% to 615.2.
U.S. crude and gasoline stockpiles fell much more than expected last week due to a steep drop in imports and lower refinery utilization, a weekly government report said Wednesday. Crude supplies fell 3.5 million barrels in the week ending Aug. 24, compared with analyst estimated for an 800,000 barrel draw, the U.S. Energy Information Administration said.
Crude oil futures traded in New York rose $1.12 to $72.85 a barrel after the report was released.
Treasury prices moved higher, sending yields lower.
Investors continue to monitor developments in global credit markets, which have been impacted by defaults and other developments in the U.S. mortgage market.
Fitch Ratings downgraded several U.S. homebuilders in the light of problems in the home mortgage industry.
The ratings agency said it cut the ratings for Hovnanian Enterprises, Centex and Lennar, as well as M/I Homes and Standard Pacific.
It lowered the outlook for KB Home, MDC Holdings and Toll Brothers to "Negative," but affirmed its ratings and "Stable" outlook for NVR, citing its strong credit protection and balance sheet liquidity among the main reasons.
And Chrysler may join the trend in the rest of the auto industry and sell non-core business, the Wall Street Journal reported on its Web site.
European stocks shed early losses and were mostly higher as investors saw the U.S. selloff as a buying opportunity. However, analysts said the markets likely will remain volatile because of turmoil in the credit markets.
A structured investment vehicle managed by British hedge fund Cheyne Capital Managementsaid it was seeking to restructure after being forced to start selling assets to pay down debt.