While you were sleeping: Wall St dips on home sales; central banks scale back

Friday 25th September 2009

Stocks on Wall Street dipped after figures showed sales of existing homes unexpectedly fell and investors pondered the implications if the Federal Reserve exits its extraordinary stimulus measures.

The Standard & Poor’s 500 fell 1% to 1050.78 and the Dow Jones Industrial Average declined 0.4% to 9707.44. The Nasdaq Composite fell 1.1% to 2107.61.

Sales of existing US homes fell last month, the first decline since March, according to the National Association of Realtors. Sales dropped 2.7% to an annual rate of 5.1 million. The median price slid 12.5% in August from the same month of 2008.

The Federal Reserve this week kept interest rates near zero while saying activity in the housing market has increased. It will extend its US$1.25 trillion programme to buy mortgage-backed securities by three months.

Also looming for the housing market is the expiry of the Obama administration’s US$8,000 tax credit for first-home buyers at the end of November.

Homebuilder DR Horton Inc. declined 4.2% to US$11.93. Alcoa Inc, the aluminium producer, fell 4.5% to US$13.51, leading the Dow lower, as prices of metals fell.

Freeport-McMoRan Copper & Gold Inc. dropped 4.2% to US$68.10 as copper declined. Chevron Corp., the second-largest US oil producer, fell 0.9% to US$70.71 as the price of oil fell.

Bank of America declined 3% to US$16.98 after the Federal Reserve announced it would reduce its liquidity facilities. Deutsche Bank chief executive Josef Ackermann said global leaders’ plans to tighten financial regulation will restrain bank profits.

The number of Americans seeking unemployment benefits fell last week to a two-month low, according to the Labor Department. The number of claims unexpectedly declined to 530,000 from 551,000 in the previous week.

The US dollar gained against the euro after some central banks said they will scale back some of their extraordinary measures that have flooded financial markets with dollars.

The Fed, the European Central Bank, Bank of England and Swiss National Bank all announced plans to scale back their emergency lending programs.

The euro weakened by 0.4% to $1.4653, having been as strong as $1.4842 this week, and slipped 0.6% to 133.66 versus the yen. The greenback was little changed at 91.24 yen.

In Europe, the Dow Jones Stoxx 600 tumbled 1.9% to 239.98, paced by lenders as central banks said they would scale back emergency lending programmes. Among regional benchmarks, the UK’s FTSE 100 fell 1.2% to 5079.27, Germany’s DAX 30 dropped 1.7% to 5605.21 and France’s CAC 40 slipped 1.7% to 3758.36.

Crude oil fell to the lowest level in a month after the home sales data stirred concern a US economic recovery won’t be speedy.

Crude for November delivery fell 4.4% to US$65.91 a barrel on the New York Mercantile Exchange.

Copper also slid to a one-month low, as warehouse stockpiles monitored by the London Metal Exchange rose.

Copper futures for December delivery fell 3.5% to US$2.7095 a pound on the the New York Mercantile Exchange.

Businesswire.co.nz

Comments from our readers

No comments yet