Stocks Slide as Home Sales Hit New Low

Stocks turned lower Wednesdy after a report showed new home sales hit a record low last month.

The Dow Jones Industrial Average was down about 40 points, or 0.4 percent, after losing 1.4 percentin the previous session.

Boeing and Alcoa were among the early leaders on the Dow, while Pfizer and Microsoft were at the back of the pack.

New home sales dropped a whopping 32.7 percent to a record low 300,000 annual pace in May as the first-time homebuyers' tax credit expired. Economists had expected a more modest drop to a 430,000 rate.

This came after a report Tuesday showed existing-home sales fell 2.2 percentin May from April.

Investors backed off one safe-haven trade, with gold headed down toward $1,230 an ounce, but consumer staples were one of the morning's best-performing sectors.

Investors will look to the Fed statement for guidenace. The central bank wraps up a two-day policy meeting today and is expected to renew its pledge to keep rates exceptionally low for an extended period.

Bank stocks opened higher, with Citigroup up about 1 pecent.

Stocks wavered Wednesday as investors remained tentative ahead of the Fed statement, due out this afternoon. Banks were higher at the start. The dollar rose amid increased concerns about Europe, sending oil and gold prices lower.

Tech was in focus as Apple’s new 4G iPhone, the fourth iPhone model in as many years, hits store shelves today.

Microsoft said it sees strong online advertising growth over the next four to five years.

And the FCC approved Verizon Wireless's $2.35 billion wireless spectrum license sale to AT&T on Tuesday.

BP’s CEO Tony Hayward has relinquished his role managing the company’s response to the spill to Robert Dudley, a former Mississippi resident who has plenty of experience repairing acrimonious relationships.

Crude oil fell to around $76 a barrel after a report showed an unexpected jump in U.S. crude supplies, suggesting that global demand remains jagged.

Oil company stocks briefly rose late Tuesday after a U.S. judge ruled against a six-month moratorium imposed by the White House on deepwater drilling, but the Obama administration announced that it would immediately appeal, and the gains were reversed.

Billionaire investor George Soros warned that Germany risks causing the collapse of the eurowith its austerity policies.

Britain announced its steepest cuts in decades Tuesday, aiming to sharply reduce public debt, with deep cuts expected to public services, as well as higher sales taxes, higher capital gains taxes and a “bank tax” levy implemented in the near-term.

At 10 am New York time, May’s new home sales are announced, with the consensus forecasting a drop to 430,000 homes from 504,000 sold in April, according to economists at New home sales rose to the highest level since May 2008 last month, as buyers rushed in to beat the deadline for the first-time and existing homebuyers' tax credit.

At 10:30 am, crude inventories figures are released, and at 2:15 pm, the Federal Open Market Committee will announce its rate decision. Economists are expecting that the rate will be held unchanged at 0.25 percent.

On the earnings front, Rite Aid shares jumped after the company chain reported a smaller-than-expected loss and affirmed its full-year outlook.

Carnival cruise lines reported earnings after-hours that beat analyst expectations but projected third-quarter earnings below estimates.

Still to come: Earnings are due out after the bell from Nike and Bed, Bath & Beyond .

This Week:
WEDNESDAY: Weekly mortgage apps; new home sales; weekly oil inventories; 5-yr note auction; FOMC interest rate decision; Galleon hearing; Earnings from Nike and Bed Bath & Beyond
THURSDAY: Durable goods orders; weekly jobless claims; 7-yr note auction; iPhone 4 on sale; Yahoo shareholders meeting; Earnings from Lennar, Oracle and Research In Motion
FRIDAY: Final read on Q1 GDP; corporate profits; consumer sentiment; XTO shareholders meeting on Exxon buyout; Earnings from KB Home

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