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Stocks end mixed after home sales disappoint

Wall Street pared steep losses Monday to end narrowly mixed after a surprise drop in new home sales for February triggered further concern that economic growth is slowing more than expected.
/ Source: The Associated Press

Wall Street pared steep losses Monday to end narrowly mixed after a surprise drop in new home sales for February triggered further concern that economic growth is slowing more than expected.

The Commerce Department reported that sales of new single-family homes last month to a seasonally adjusted annual rate of 848,000. It was the slowest sales pace in nearly seven years and dimmed hopes for a rebound in the troubled housing market.

Economists have been watching the housing industry for a hint about where the economy is heading. The disappointing data came amid continued concern about the subprime mortgage market, which has been slammed by an increase in delinquencies in recent months.

This sent major indexes down throughout most of the session, with the Dow Jones industrials racking up triple-digit losses. Investors used the decline to buy some shares before the second-quarter ends on Friday, analysts said.

“The market is already worried more about economic growth than inflation, so I think you’re going to see reactions like this,” said Todd Salamone, director of trading at Schaeffer’s Investment Research in Cincinnati. “Overall, its impressive from the comeback we’ve had. There’s been a whirlwind of attention about housing’s effects on the economy, it isn’t anything new and these pullbacks are buying opportunities.”

According to preliminary calculations, the Dow fell 11.94, or 0.10 percent, to 12,469.07. Last week, the benchmark index posted a 370 point gain, its best weekly point rise in four years. It dropped as much as 112 points earlier on Monday.

Broader stock indicators were slightly higher. The Standard & Poor’s 500 index rose 1.39, or 0.10 percent, to 1,437.50, and the Nasdaq composite index added 6.70, or 0.27 percent, to 2,455.63.

Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.60 percent from 4.61 percent late Friday. Bond investors have been hoping that a slowing economy will cause the Federal Reserve to lower interest rates.

The dollar traded mixed against other major currencies, while gold prices advanced.

Investors also are focused on a spate of economic data due this week, including the gross domestic product report due on Wednesday.

“Investors are looking to figure out how things are going to shake out after a big move higher last week,” said Mike Malone, a trading analyst at Cowen & Co. “Given the magnitude of the move higher we had last week, I don’t find this to be overly surprising.”

, with a barrel of light sweet crude up 63 cents to $62.91 on the New York Mercantile Exchange. Crude prices have risen steadily on continued tensions between Iran and the West following Iran’s detention of British naval personnel. Recent declines in U.S. oil inventories also supported the market.

Citigroup Inc. fell 18 cents to $51.54. The Wall Street Journal reported Citigroup might reduce its work force by about 5 percent. The company has been under pressure during the past year to boost earnings to fend off rivals from eating into its global market share.

Dell Inc. rose 79 cents, or 3.5 percent, to $23.62 after a Goldman Sachs analyst said the computer maker should see benefits from its turnaround efforts later this year.

Walgreen Co. reported second-quarter profit surpassed Wall Street projections as the drug store chain posted robust revenue from retail prescriptions. The stock fell 47 cents to $47.30.

Fiscal fourth-quarter profits at Tiffany & Co. remained essentially flat as the luxury jewelry retailer recorded an impairment charge. Revenue, however, rose 15 percent to $986.4 million. Results came in ahead of Wall Street’s expectations. The stock rose 13 cents to $45.63 after hitting a 52-week high of $46.09 at the open.

Kimberly-Clark Corp., the maker of consumer brands like Kleenex and Huggies, on Monday said it still expects to meet its full-year profit target. Shares fell 5 cents to $68.94.

Saudi Basic Industries Corp. is planning a bid worth up to $12 billion for General Electric Co.’s plastics unit, the Financial Times reported Monday. GE rose 18 cents to $36.

The Russell 2000 index of smaller companies was fell 3.26, or 0.40 percent, at 806.25.

Overseas, Japan’s Nikkei stock average closed up 0.24 percent. Britain’s FTSE 100 down 0.75 percent, Germany’s DAX index was down 1.02 percent, and France’s CAC-40 was fell 1.04 percent.