Stocks Tumble After Home-Sales Report
Stocks declined as the market got a triple whammy: Oil resumed its ascent, major earnings reports sparked a fresh wave of concern about corporate profits and home sales hit a 10-year low.
Existing-home sales fell 2.6 percent to a 4.86 million annual rate in June, the National Association of Realtors reported; the decline was more than twice what economists had expected and the annual rate was the lowest in 10 years.
Meanwhile, 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.
Oil ticked higher, trading between $125 and $126 a barrel, after falling to a seven-week low of $124.58.
Today's uptick in oil prices was disappointing as crude's slide had cheered up the market that perhaps the long energy, short financials trade was unwinding.
It was a big day on the earnings front.
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 Chemical missed the earnings mark set by analysts as the company's price increases weren't enough to offset the rise in energy and raw-material costs.
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 Applewarned that it would miss Wall Street's targetfor 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:
FRIDAY:Durable-goods orders; consumer sentiment; new-home sales; earnings from Netflix
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