The stock market gave back a hefty chunk of its July rally Thursday as fresh data pointed to more economic pain.
The housing-market turnaround that Wall Street has been counting on appeared no closer, and perhaps further away than ever, as June home-sale figures came in worse than expected.
The Dow Jones industrial average slumped 283.10 points, or 2.4%, to 11,349.28, the biggest decline since the index tumbled 358 points June 26.
The market sell-off, led by financial and builder stocks, took back 42% of the Dow's 670-point rebound since it reached a two-year low July 15.
It was a broad-based decline: The Standard & Poor's 500 index fell 29.65 points, or 2.3%, to 1,252.54; the Nasdaq composite dropped 45.77 points, or 2%, to 2,280.11.
Investors got several jolts Thursday from the housing sector.
First, the National Assn. of Realtors said sales of previously owned homes slid a larger-than-expected 2.6% in June from May, to an annualized rate of 4.86 million units -- the lowest in a decade.
In a separate report, the Census Bureau estimated that 18.6 million homes, apartments and condos now are vacant, up 7.2% from a year earlier.
In addition, shares of Calabasas-based builder Ryland Group plummeted after the company reported a $242-million second-quarter loss late Wednesday. The loss, along with red ink reported by rival Pulte Homes, put further pressure on builders' stocks. Ryland dived $5.07, or 19%, to $21.43, wiping out all of its July rebound. Pulte was off $1.78, or 14%, to $11.03.
Among other builders, Lennar fell $2.47, or 18%, to $11.07, while KB Home sank $3.04, or 15%, to $16.70.
Finally, mortgage-finance giant Freddie Mac reported that mortgage rates surged over the last week, in large part because market jitters over the financial health of Freddie and sibling Fannie Mae raised the market interest rates on their bonds. As those yields rise, so do the interest rates on most individual mortgages.
The average 30-year fixed-rate home loan jumped to 6.63% this week, the highest in nearly a year and up from 6.26% last week. That means fewer people can qualify for a mortgage on any particular home -- the last thing the housing market needs.
Fannie Mae tumbled $2.98, or 20%, to $12.02, while Freddie Mac slumped $1.99, or 18%, to $8.81.
Wall Street knows there's a rescue package for the housing market (and for Freddie and Fannie) awaiting Senate approval and President Bush's signature. But that didn't seem to give sellers any pause.
