Stocks Skid After Home Sales, Boeing News
Stocks faltered Tuesday after a report showed home sales rose but not as much as expected.
Existing-home sales rose 2.4 percentto a 4.77 million annual pace in May, higher than the previous month but less than the 4.81 million rate expected.
"It's good to see some modest gains [in home sales] but it's a bit too early to say that we're seeing the start of a recovery," Gary Thayer, senior economist at Wells Fargo Advisors, told Reuters. "Home prices are still declining and inventory is still high. Those are headwinds that may restrain a recovery in housing."
Stocks had opened higher, rebounding off the previous session, when when stocks saw their worst one-day loss in two months, which several market pros cited as evidence that a correction is underway. But it wasn't all pessimism.
"In the short term, this could end up being a more serious correction but what we're advising investors to do is really position themselves into what we think will be a very strong year end," Thomas Lee, chief US equity strategist at JPMorgan, said on CNBC this morning.
Boeing was the biggest drag on the Dow after the aerospace giant announced yet another delay for its 787 Dreamliner.
Banks were mostly higher after taking a hit yesterday. Bank of America and JPMorgan gained more than 1 percent.
Bank of America proposed issuing $2.54 billion of common stock in exchange for existing preferred stock, in order to raise the capital required by federal regulators after the "stress test."
But there were a handful of decliners in the sector, including Citigroup , Suntrust, Fifth Third and Morgan Stanley.
Ford Motor skidded following news that the automaker will get a government loan to develop fuel-efficient vehicles, part of a $25 billion government program.
General Motors and Chrysler have already received loans from the government; Ford had held out until now.
Apple shares were down about 2 percent despite news that CEO Steve Jobs has returned to workafter a six-month medical leave. News broke over the weekend that Jobs had a liver transplant two months ago.
FedEx shares rose after JPMorgan raised its rating on the stock to "overweight" from "neutral."
Starbucks also got an upgrade — Robert W. Baird upgraded the barista's stock to "outperform" — sending its shares higher.
Boston Scientific shares rallied after the drug maker said one of its heart devices showed promise for slowing the progression of heart failurein a large clinical trial.
ArcelorMittal advanced after the world's largest steelmaker entered an agreement with Brazilian mining group Vale to substantially cut iron-ore prices.
An ArcelorMittal spokesman said the agreement was "of the greatest importance" as iron ore prices fall. Company shares gained 2.5 percent premarket while Vale shares also edged higher.
The market's focus will be on the Federal Reserve today as policymakers begin a two-day meeting, which will conclude Wednesday with their latest assessment of the nation's economy. The Federal Open Market Committee (FOMC) is not expected to raise benchmark interest rates, currently near zero.
And, investors will also be keeping a close eye on the Treasury, which will announce the results of a record $40 billion 2-year note auction at 1pm ET. It's part of a total of $104 billion in auctions this week.
However, in what may be seen as an encouraging sign, a senior Treasury official Tuesday morning said that 80 percent of U.S. borrowing requirements for fiscal 2009 are already funded.
Moody's Investors Services said the US' triple-A ratings could come under threat if Washington were unable to bring its public debt back to a downward trajectory and/or if the dollar were severely challenged as the main international reserve currency.
The American Petroleum Institute will release its weekly stockpile data at 4:30 pm New York time.
President Obama holds a 12:30 pm New York time news conference at the White House. He also plans to spend part of the day meeting Chile President Michelle Bachelet.
And supermarket chain Kroger will report quarterly earnings before the opening bell, while software giant Oracle will post earnings after the closing bell.
— Peter Schacknow, Senior Producer, CNBC Breaking News Desk contributed to this report
On Tap for Next Week:
TUESDAY: Two-day Fed meeting begins; Earnings from Oracle after the bell
WEDNESDAY: Weekly mortgage applications; durable goods; new-home sales; weekly oil inventories; Fed announcement
THURSDAY: Weekly jobless claims; GDP (final); Earnings from Palm
FRIDAY: Personal income/spending; consumer sentiment; Earnings from KBHome
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