Stocks Slip After Surprise Drop in Home Sales
Stocks declined Wednesday, despite a rise in durable-goods orders and some earnings beats, as worries about the recovery dragged on the market.
And, the data today backed up those fears: New home-sales dropped 3.6 percentin September and August's gain was revised lower. Economists had expected sales to rise. That piled on to the bad news for the housing sector after an earlier report showed mortgage applications fall for the third week in a rowlast week.
And Goldman Sachs slashed its forecast for third-quarter GDP to 2.7 percent from 3 percent. The government's first read on Q3 GDP is due out on Thursday.
Investors shrugged off a report that showed durable-goods orders rose 1 percentin September, though compared to last year fell more than 24 percent.
Slow growth seemed to be the theme of the day, with the market nursing a hangover from a consumer confidence report Tuesday that also sounded the theme of economic fragility. Tech and consumer-discretionary stocks were among the hardest hitin yesterday's session.
The tech-heavy Nasdaq is now lower for October, though the Dow and S&P 500 are still higher for the month.
In early trading, Alcoa, JPMorgan and Bank of America were the biggest drags on the Dow. Telecoms AT&T and Verizon were at the top of the pack.
Oil fell, trading below $79 a barrel, after a report showed crude inventories rose by just 778,000 barrels last week. Economists had expected a 1.7 million build.
On the earnings front, ConocoPhillips reported a sharp drop in earnings and revenue from a year earlier but still beat expectations.
This came after Visa beat on both earnings and revenue with its results after the bell Tuesday, and raised its dividend.
Financials will be back in focus as an executive-compensation hearing kicks off today at 11am. Pay czar Kenneth Feinberg is expected to testify before the House Oversight Committee on the compensation decisions he's made regarding the seven companies under his jurisdiction — AIG , Bank of America , Citigroup , Chrysler, Chrysler Financial, General Motors, and GMAC.
- Treasury Talks to GMAC About 3rd Cash Infusion
- Pay Czar Raised Base Pay at US Firms: Report
A tale of two IPOs today: Vitamin Shoppe shares soared after the vitamin chain's IPO priced above expectations. It was the first retailer to go public in two years. Addus Homecare fell in its debut on the Nasdaq after pricing below expectations.
Apollo Group dragged on the Nasdaq, tumbling more than 15 percent, as federal regulators opened a probe into the educational group's accounting and at least three brokerages downgraded the stock.
Elsewhere, the Treasury continues its record week of auctions with the sale of $41 billion in 5-year notes. Yesterday's sale of 2-year notes saw extremely strong demand; today's auction comes at 1 pm.
There will be a fresh update on the health of the auto industry in general and General Motors in particular today, when Susan Docherty, the company's new VP of U.S. Sales, holds a conference call. That comes just a few days before the automakers release their October sales figures.
AstraZeneca could be a stock to watch as the company pulled its experimental lung cancer drug Zactima from the regulatory submission process, after the drug demonstrated no survival advantage when added to chemotherapy.
- Peter Schacknow contributed to this article.
Still to Come:
WEDNESDAY: Executive-compensation hearing; Yahoo analyst meeting
THURSDAY: 80th anniversary of 1929 market crash; Weekly jobless claims; first look at Q3 GDP; Larry Summers speaks in NYC; Earnings from AstraZeneca, ExxonMobil, P&G, Aetna, Kellogg, Motorola and Sprint Nextel
FRIDAY: Personal income and spending; consumer sentiment; Earnings from Chevron
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