Kitsap Business and Economy

Dow down 17 points so far today, at 10,387.

NEW YORK (AP) — Stocks mostly fell Wednesday after home construction and applications for building permits slumped in May following the end of a homebuyer tax credit.
The housing report and a disappointing profit forecast from FedEx Corp. raised questions about the economic recovery. The package delivery company is seen as a barometer of the economy because shipping demand tends to increase as business conditions improve. The stock fell 2.2 percent.
Shares of BP turned higher after the New York Times reported that BP would put about $20 billion in an escrow account for claims tied to the Gulf of Mexico oil spill. BP rose 1 percent.
The Dow Jones industrial average fell about 20 points in afternoon trading. Broader indexes were mixed. The modest moves came a day after the Dow rose 214 points to its highest close in nearly a month. Stocks had risen three of the past four days.
The government’s report on housing raised concerns that weaker demand for homes will hurt an economic rebound. Construction of homes and apartments fell 10 percent from a month earlier to an annual rate of 593,000, well below the 650,000 economists had forecast. A 17 percent slide in construction of single-family homes was the largest since January 1991.
Applications for building permits fell 5.9 percent to an annual rate of 574,000, the lowest level in a year. Analysts had forecast an increase. Demand for permits is an indicator of future homebuilding activity.
The weaker-than-expected numbers come after a homebuyer tax credit expired in April.
Kevin Smith, a housing market analyst at Chapdelaine Credit Partners in New York, said the drop in the home construction and permit numbers extends a string of choppy readings since October, and that it’s too soon to tell how housing will hold up. He noted that the prior month had been the best in more than two years.
“It’s going to be a bumpy ride,” Smith said. He said housing won’t make a strong recovery until unemployment falls and overall confidence grows.
Stocks pulled off their early lows after the euro strengthened. A Spanish newspaper reported that the International Monetary Fund and European Union were trying to come up with a financial rescue for Spain. Officials in Spain denied the report. The country, like Greece and Portugal, is facing high debt loads. The euro rose to $1.2326.
U.S. markets have been tracking the moves of the 16-nation currency since major stock indexes hit their 2010 peak in late April. Traders see the shifts in the euro as a reading on confidence in Europe’s ability to cut spending without endangering an economic rebound there, which could spill over to other regions.
In midday trading, the Dow fell 19.57, or 0.2 percent, to 10,383.16. On Tuesday, the Dow ended above its average close of the past 200 days for the first time since May 19. Finishing above that level is seen as a sign of strength.
The broader Standard & Poor’s 500 index fell 2.30, or 0.2 percent, to 1,112.93, and the Nasdaq composite index rose 0.10, or less than 0.1 percent, to 2,305.98.
Bond prices rose, pushing down interest rates. The yield on the benchmark 10-year Treasury note fell to 3.28 percent from 3.31 percent late Tuesday.
The dollar rose against other major currencies and gold prices climbed.
FedEx fell $1.90, or 2.3 percent, to $81.11 after its fiscal 2011 forecast came in below analysts’ forecasts. The company said its outlook was based on the assumption of a continued “moderate recovery” in the global economy.
BP rose 29 cents to $31.69.
Crude oil rose 52 cents to $77.46 per barrel on the New York Mercantile Exchange.
About two stocks fell for every one that rose on the New York Stock Exchange, where volume came to 425 million shares compared with 372 million shares traded at the same point Tuesday.
The Russell 2000 index of smaller companies fell 1.90, or 0.3 percent, to 666.87.
Britain’s FTSE 100 rose 0.4 percent, Germany’s DAX index gained 0.3 percent, and France’s CAC-40 rose 0.4 percent.

This entry was posted on Wednesday, June 16th, 2010 at 8:59 am by Rachel Pritchett and is filed under Uncatagorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.