A mixed report about the housing market and unrest in Europe on Wednesday extended the longest losing streak for the Standard & Poor’s 500 index since mid-July. Other risky assets, like European stocks and oil, fell more sharply.
A mixed report about the housing market and unrest in Europe on Wednesday extended the longest losing streak for the Standard & Poor’s 500 index since mid-July. Other risky assets, like European stocks and oil, fell more sharply.
The median price of new homes sold in August rose by a record amount, while sales of new homes dipped slightly. Sales in August were up 27.7 percent from a year earlier, but remain at about half the pace economists consider healthy.
Stronger data on the U.S. housing market have insulated stocks in recent weeks from a slackening global economy. Stocks’ other main source of support has been the Federal Reserve’s program to boost the economy by pumping money in. That idea lost some luster Tuesday after a key Fed official said he doubted it will do much good.
“There was some optimism coming into the market, and that’s usually when you’re most vulnerable to sell-offs when there are negative headlines” like the Fed official’s comments, unrest in Europe and weaker data about the U.S. economy, said Todd Salamone, director of research at Schaeffer’s Investment Research.
Indexes had risen to levels they hadn’t beat for months or years, Salamone said, creating “an almost perfect storm in terms of the vulnerability to short-term impacts.”
The dip in home sales hurt homebuilder stocks. PulteGroup Inc. fell 76 cents, or 4.7 percent, to $15.30; KB Home 51 cents, or 3.5 percent, to $13.90 and Beazer Homes USA Inc. 14 cents, or 3.9 percent, to $3.50.
European stocks had their worst day in months as unrest threatened to boil over in Greece, where deep budget cuts have eroded people’s living standards, and Spain, where citizens are resisting a likely bailout from international lenders. Earlier, Asian stocks closed lower.
The euro fell sharply against the dollar, and the price of oil closed below $90 per barrel for the first time since early August.
Rising demand for lower-risk investments fed strong bids for U.S. Treasury debt. The yield on the 10-year Treasury note fell to 1.62 percent from 1.67 percent late Tuesday. A bond’s yield falls as its price increases.
The Dow Jones industrial average fell 44.04 points, or 0.3 percent, to 13,413.51. The S&P 500 index fell 8.27, or 0.6 percent, to 1,433.32. The only category that rose was utilities, relatively safe stocks that tend to hold their value when the economy is weak.
The Nasdaq composite average fell 24.03 points, or 0.8 percent, to 3,093.70.
The declines came a day after the worst sell-off for the S&P 500 in three months. Charles Plosser, president of the Fed’s Philadelphia branch, told an audience Tuesday the Fed’s effort to support the economy would likely fall short of its goals.
Stocks rallied this month on bold moves by central bankers. They had one of their biggest gains of the year Sept. 6 after Mario Draghi, the president of the European Central Bank, said the ECB would buy unlimited amounts of government bonds to lower borrowing costs for Europe’s debt-burdened countries.
A week later, Fed Chairman Ben Bernanke said the Fed will buy $40 billion of mortgage bonds each month until the economy strengthens. It also plans to hold interest rates at super-low levels into 2015.