Stocks fall after sales of existing homes decline
NEW YORK -- Stocks skidded lower Thursday after a steeper-than-expected decline in existing home sales wiped away some of the market's optimism about upbeat earnings reports. The major indexes fell more than 1 percent, including the Dow Jones industrial average, which fell more than 200 points.
The National Association of Realtors said sales resumed their decline in June after a slight rebound in May. Existing home sales declined by 2.6 percent in June, well beyond the 1 percent drop economists had forecast.
The sales drop was a reminder that the housing market and the overall economy are still troubled in many areas. And that persuaded many stock investors to cash in some of their gains from a rally that began last week.
Investors were also absorbing a mix of earnings reports from names like Ford Motor Co., which reported a big loss, and Dow Chemical Co., which said higher costs for raw materials sent earnings down sharply. But drug makers Bristol-Myers Squibb Co. and Eli Lilly & Co. both reported higher earnings as the weak dollar boosted foreign sales, and Amazon.com Inc. turned in a solid report that beat expectations.
Analysts have said that so far, second-quarter earnings reports have been better than many investors expected. That had lifted the market's mood in recent sessions.
Stephen Goddard, co-portfolio manager of the AFBA 5Star Balanced Fund, said the decline in housing numbers alongside some better-than-expected earnings reports shouldn't be surprising because mixed reports are common during economic downturns.
"All the numbers don't turn at the same time," he said of economic readings. "It's usually one by one by one. You start seeing incremental improvement."
In midafternoon trading, the Dow fell 206.48, or 1.78 percent, to 11,425.90. The blue chip index rose nearly 170 points the past two days. A pullback as part of the normal ebb and flow of trading wouldn't have come as a surprise investors though the declines Thursday seemed to reveal renewed unease about the economy.
Broader stock indicators also declined Thursday. The Standard & Poor's 500 index fell 20.59, or 1.61 percent, to 1,261.60, and the Nasdaq composite index declined 29.37, or 1.26 percent, to 2,296.51.
Stocks rose sharply the past two sessions as the price of oil continued its decline. The price is now down more than $20 after just weeks ago hitting a record above $147 a barrel. Oil fluctuated Thursday. A barrel of light, sweet crude rose 33 cents to $124.77 on the New York Mercantile Exchange.
