Dow now at 10,093, down 80 points.
NEW YORK (AP) — Stocks fell Tuesday after another disappointing
report on the housing market renewed worries about the economy.
The Dow Jones industrial average lost 97 points in late afternoon
trading after news that sales of previously occupied homes fell
last month to their lowest level in 15 years.
The Dow briefly dipped below 10,000 for the first time in seven
weeks and was down as much as 183 points earlier in the day before
paring its losses. Investors seeking refuge from the latest stock
swings piled back into Treasurys, sending interest rates lower. The
yield on the two-year Treasury note touched another record low.
Global markets fell sharply. Japanese stocks led the way lower,
falling more than 1 percent as the yen hit a fresh 15-year high
against the dollar. Japan’s economy relies heavily on exports, so a
stronger yen hurts the profits of major Japanese companies.
Stocks have been sliding in recent days as investors focus on signs
that economic growth is slowing. A new wave of corporate dealmaking
gave stocks a temporary boost Monday, but those gains quickly
faded.
The National Association of Realtors said sales of previously
occupied homes plunged 27 percent in July to an annual rate of 3.83
million, the lowest rate in 15 years. That’s much worse than the
4.7 million estimate from economists polled by Thomson Reuters. The
27 percent drop from the previous month was the biggest since
record-keeping began in 1968.
Home sales have tumbled since a homebuyer tax credit expired at the
end of April, despite mortgage rates falling to record lows. A
stubbornly high unemployment rate of 9.5 percent has been keeping
home sales down, and banks have also been cautious in making new
loans.
“Without a boost in job creation, (buyers) just won’t have the
confidence to step in and buy a new home,” David Katz, principal at
Weiser Capital Management said.
In afternoon trading, the Dow Jones industrial average fell 97.33,
or 1.0 percent, to 10,076.48. The Standard & Poor’s 500 index fell
11.57, or 1.1 percent, to 1,055.79, while the Nasdaq composite
index fell 27.05, or 1.3 percent, to 2,132.54.
About three stocks fell for every one that rose on the New York
Stock Exchange where volume came to 755 million shares.
Japan’s Nikkei stock average fell 1.3 percent after worries about
the high yen hit share prices there.
In Europe, Britain’s FTSE 100 fell 1.5 percent, Germany’s DAX index
dropped 1.3 percent, and France’s CAC-40 fell 1.8 percent.
The yield on the 10-year Treasury note, which moves opposite to its
price, fell to 2.50 percent from 2.60 percent late Monday. That
yield helps set interest rates on mortgages and other consumer
loans.
The 10-year note’s yield continues to hover around levels not
reached since March 2009, when the stock market hit a 12-year low
and investors were concerned about the deepening recession. The
yield on the two-year note went as low as 0.46 percent, another in
a series of record lows.
Stock traders are “taking their cues from the bond market,” said
Lawrence Glazer, a managing partner at Mayflower Advisors. “It
really has been a dramatic and frightening shift” in Treasury
prices, which has spooked investors and led to worries about
another recession, Glazer said.
Reports due out later in the week will also provide insight into
the health of the economy. Data on new home sales, durable goods
orders, weekly jobless claims and consumer sentiment are scheduled
for later in the week.
The government will also release a revised report on second-quarter
gross domestic product. The broadest measure of the country’s total
economic output is expected to be lower than initially thought,
adding to concerns about the pace of the domestic recovery.
