Stocks Slide Further After Home Sales
Stocks declined after oil resumed its ascent and a handful of companies, including including Dow Chemical and Ford, delivered reports that left investors worried about the outlook for corporate profits.
A drop in home sales and a jump in jobless claims above the key 400,000 mark added some pressure.
Existing-home sales fell 2.6 percent to a 4.86 million annual rate in June, the National Association of Realtors reported; the median home price fell and inventories rose. Jobless claims increased by 34,000 to 406,000 last week, the Labor Department reported. Continuing claims, however, fell by 9,000 to 3.107 million.
The market took an early earnings shock when Ford Motor reported a larger-than-expected loss of $8.7 billion. Analysts had expected dismal results from Ford as it grapples with high gasoline prices and competitive pressures but the overall loss and North American sales came in even worse than expected.
Stock markets have been cheered by sharp declines in the price of crude over the past two weeks, with some investors taking the drop as a signal to buy into beaten shares.
"The trade that some people have had, which is long energy, short financials -- we're starting to that unwind with the oil price dropping," Edward Lewis, partner from Atlantic Equities said on CNBC.
Oil ticked higher, trading between $125 and $126 a barrel, after falling to a seven-week low of $124.58.
In other earnings news, Eli Lilly reported its earnings rose on higher sales of its prescription drugs and sharply lower taxes, but the drug maker cut its 2008 forecast.
3M, which makes everything from Scotch tape to optical films for liquid crystal displays, beat forecasts and backed its full-year outlook, helped by demand from emerging markets.Dow Chemicalposted a decline in second-quarter earnings
as energy and raw material costs overshadowed the benefits of price increases.
After the bell Wednesday, Amazon.com reassured investors by beating Wall Street targetsbut the sale of one-off assets could have skewed the numbers.
Earlier this week, AT&T met earnings expectations, helped by an increase in wireless subscribers, and Yahoo reported its earnings fell but said its 2008 outlook remains intact.
Of course, it hasn't all been happy-happy in tech land: Tech darling Apple issued a profit warning for the current quarter and Texas Instruments missed its target amid weak cellphone-chip sales.
(With techs delivering a mixed bag of reports, which ones should you buy? Click on the video at left.)
Fannie Mae and Freddie Mac opened higher after the House passed a rescue plan to relieve struggling home buyers came under scrutiny as some claimed the move wouldn't cure the real-estate market of its deep-set problems.
"This isn't going to be the catalyst for a better housing market," said Mark Zandi, chief economist at Moody's Economy.com, told the Associated Press.
The spectre of rising foreclosures prompted San Diego City Attorney Michael Aguirre to file a lawsuit against Bank of America to force the bank to make a "foreclosure sanctuary."
In other news, the federal minimum wage was upped by 70 cents, but the some 2 million Americans probably won't know the benefit as rising consumer prices counteracts the rise.
Still to Come:
THURSDAY: Existing-home sales
FRIDAY:Durable-goods orders; consumer sentiment; new-home sales; earnings from Netflix
Send comments to firstname.lastname@example.org.