While you were sleeping: US housing starts, producer prices disappoint

Wednesday 21st October 2009

US housing starts rose less than expected and producer prices fell in September, suggesting the world’s biggest economy is managing only a sluggish recovery. Shares on Wall Street declined.

Housing starts gained 0.5% to an annual pace of 590,000 last month, from a revised-lower 587,000 in August, according to the Commerce Department. Economists had expected starts to rise to 610,000.

The Obama administration’s US$8,000 first-home buyer’s tax credit ends on November 30, which may take some puff out of the housing market. Single-family homes rose 3.9% to an annual pace of 501,000 while multi-family units fell 15% to a rate of 89,000.

Producer prices fell 0.6%, according to the Labor Department. Economists had expected no change on the month. The data fanned speculation the Federal Reserve will keep interest rates near zero for longer.

The Dow Jones Industrial Average declined 0.8% to 10016.84 and the Standard & Poor’s 500 fell 0.8% to 1088.97. The Nasdaq Composite fell 0.8% to 2159.56.

Pulte Homes Inc. dropped 4.3% to US$10.15 and Standard Pacific Corp. declined 2.9% to US$3.35, leading home-builders lower, after the housing data.

Apple Inc. rose 4.9% to US$199.11 after reporting better-than-expected earnings. Caterpillar rose 3.5% to US$59.85 after beating earnings estimates.

Coca-Cola fell 1.3% to US$54.06 after the soft-drink maker’s third-quarter earnings growth was a lower-than-expected 1% and sales fell 4.2% to US$8.04 billion.

Boeing Co. fell 3.2% to US$51.74, the biggest decline on the Dow, after the shares were cut to ‘underweight’ by Morgan Stanley on a dimmer outlook for 2010.

State Street Corp., the world’s biggest money manager for institutional investors, fell 7.5% to US$58.33 after reducing its earnings forecast.

Exxon Mobil Corp. fell 0.9% to US$78.93 and Chevron declined 1.1% to US$76.84 as the US dollar rebounded, weighing on prices of oil and commodities. Alcoa Inc., the biggest US producer of aluminium, fell 1.8% to US$13.82.

The US dollar climbed against the euro from its lowest level in 14 months and Treasury yields fell after the disappointing housing data sapped investors’ risk appetite.

The dollar rose to $1.4925 per euro from $1.4965 yesterday. The yen weakened to 90.75 per dollar from 90.55. The yen traded at 135.44 per euro from 135.51.

The Dollar Index, which measures the greenback against a basket of six major currencies, edged up 1% to 75.57.

The yield on benchmark 10-year Treasuries fell 6 basis points to 3.33% and the yield on 30-year Treasuries dropped 5 basis points to 4.15%.

The US Securities and Exchange Commission will seek to toughen limits on anonymous trading carried out on stock platforms known as dark pools, Bloomberg reported, citing people familiar with the situation.

The commission will propose lowering the daily volume in a company’s shares that can be executed in private on any networks to 0.25% from 5% at a hearing in Washington this week, the report said. Some lawmakers charge that the dark pools limit transparency in securities markets.

Crude oil fell from a 12-month high after the housing starts data helped lift the dollar and weighed on stocks.

Crude oil for November delivery fell 1.4% to US$78.49 a barrel on the New York Mercantile Exchange, having traded above US$80 earlier. November futures expire today.

Gold futures for December delivery edged down 0.2% to US$1,056.50 an ounce in New York.

Shares fell in Europe, with the Dow Jones Stoxx 600 Index declining 0.4% to 248.25. Among national benchmarks, the UK’s FTSE 100 fell 0.7% to 5243.40, Germany’s DAX 30 dropped 0.7% to 5811.77 and France’s CAC 40 fell 0.5% to 3871.45.

Barclays Plc fell 4.8% after Qatar Holding sold its stake in the UK’s second-largest lender.

Deutsche Bank AG slipped 1.2% after agreeing in principle to buy some assets of ABN Amro from the Dutch government, a transaction that may allow the merger of ABN and Fortis Bank Nederland. Deutsche will increase its Dutch presence by acquiring commercial bank HBU and other assets.

Businesswire.co.nz

Comments from our readers

No comments yet