Dow now at 9,828, down 53 points.
NEW YORK (AP) — Signs of a weaker housing market gave stock
investors another reason to be cautious.
Stocks fell Wednesday after the Commerce Department said new home
sales dropped for the first time in five months. Sales slid 3.6
percent in September to 402,000 from 417,000 in August, well below
the 440,000 analysts had forecast.
Investors also pulled back after Goldman Sachs Group Inc. reduced
its expectation for the nation’s economic output for the
July-September period. Goldman Sachs expects third-quarter gross
domestic product rose at an annual rate of 2.7 percent, weaker than
its earlier forecast of 3 percent.
The government’s report on third-quarter GDP is due Thursday
morning.
Analysts said the market’s slide in the past week isn’t surprising
given the size of the advance in the past eight months and only
mixed economic readings.
“I’m not panicked at the moment,” said Manny Weintraub, president
of Integre Advisors in New York. “I don’t think anyone expected a
super robust recovery.”
In early afternoon trading, the Dow Jones industrial average fell
77.16, or 0.8 percent, to 9,805.01.
The broader Standard & Poor’s 500 index fell for the fourth
straight day, sliding 15.53, or 1.5 percent, to 1,047.88. The
Nasdaq composite index fell 44.22, or 2.1 percent, to 2,071.87.
In another sign of lingering troubles in the financial industry,
GMAC Financial Services is in talks with the Treasury Department
for a third bailout. The auto and mortgage lender has been among
the hardest hit financial firms by rising loan defaults and
troubled credit markets. The government already holds a 35 percent
stake in GMAC after giving it $12.5 billion in bailout money.
Stocks struggled Tuesday after a disappointing report on consumer
confidence stirred worries about the strength of the coming holiday
shopping period. Corporate profits have been improving but
investors are still waiting for a rebound in sales.
Stocks have been falling most days since hitting their highest
levels in a year at the start of last week. A strengthening dollar
and falling commodities prices have at times weighed on stocks.
The dollar rose against most other major currencies, while gold
prices fell.
Bond prices rose as investors sought safety from a falling stock
market. That sent yields lower. The yield on the benchmark 10-year
Treasury note fell to 3.41 percent from 3.45 percent late
Tuesday.
Crude oil fell $2.14 to $77.41 per barrel on the New York
Mercantile Exchange. The drop in oil weighed on shares of energy
companies.
Oilfield services company Schlumberger Ltd. fell $1.95, or 3
percent, to $62.98.
Home builders fell after the report on new home sales. Hovnanian
Enterprises Inc. slid 40 cents, or 9.3 percent, to $3.90. Toll
Brothers Inc. fell 99 cents, or 5.5 percent, to $16.95.
The drop in new home sales follows a report from the National
Association of Realtors last week that sales of existing home sales
posted the biggest increase in 26 years in September as investors
tried to get ahead of an expiring tax credit for first-time buyers.
New home sales make up a smaller part of overall sales than sales
of existing homes.
Earnings reports also touched off some worries. Goodyear Tire &
Rubber Co.’s profit more than doubled in the third quarter as it
cut costs and added products, but the company also said it expects
operating income will fall in North America in the fourth quarter.
The stock fell $3.20, or 19.1 percent, to $13.54.
Drug distributor McKesson Corp. fell $2.16, or 3.6 percent, to
$57.46 after the company’s fiscal second-quarter earnings fell
short of analysts’ expectations.
Apollo Group Inc., parent of the University of Phoenix, fell after
the for-profit higher education company said the Securities and
Exchange Commission had launched an informal inquiry into how it
accounts for revenue. The stock fell $12.72, or 17.4 percent, to
$60.25.
Five stocks fell for every one that rose on the New York Stock
Exchange, where volume came to 802.7 million shares compared with
650.7 million shares traded at the same point Tuesday.
The Russell 2000 index of smaller companies fell 14.68, or 2.5
percent, to 572.31.
Overseas, Britain’s FTSE 100 fell 2.3 percent, Germany’s DAX index
fell 2.5 percent, and France’s CAC-40 slid 2.1 percent. Japan’s
Nikkei stock average fell 1.4 percent.
