Stocks Dive on Housing Market Weakness

stock market tradersA record plunge in existing-homes sales last month sent equity investors skittering toward safety Tuesday, pushing the Dow to a triple-digit loss.

Despite bargain pricing in many regions of the country and record-low mortgage rates, the housing market remains a source of concern for investors as evidenced by Tuesday's trading. July sales of previously occupied homes dropped more than 27%, the National Association of Realtors said Tuesday. That's the sharpest monthly drop for total existing-home sales on record going back to 1999, with declines being seen in every region of the U.S., the NAR said.

The Dow Jones Industrial Average ($INDU) lost 136 points, or 1.3%, to finish at 10,039. The blue-chip index was off as much as 183 points during the session, putting it briefly below the 10,000 level.

The broader S&P 500 ($INX) fell 15 points, or 1.5%, to 1,053. The more volatile, tech-heavy Nasdaq Composite ($COMPX) shed 36 points, or 1.7%, to settle at 2,124.

In a flight to safety, bids flowed into the bond market. The yield on the benchmark 10-Year Treasury fell below 2.5% for the first time since 2009. (Bond yields move in the opposite direction of their prices.)

Seasonally adjusted existing-home sales for July came in at a 3.83-million-unit annual rate, well below economists' average estimate of 4.65 million. June existing-home sales were revised down to 5.26 million from 5.37 million.

Home resales reached a 5.66 million annual rate in May and have been sliding ever since, hurt by the end of the home-buyer tax credit on April 30.

Still, Tuesday's batch of dismal economic news is unlikely to break the market's months-long range-bound pattern, said John Stoltzfus, market strategist with Ticonderoga Securities.

"Until the market finds a catalyst or catalysts to commit to and be driven at length by -- either up or down -- we expect rallies will be bookended by sell-offs with negative to positive to negative to positive offsets driving action that grows increasingly short in duration in any one direction," Stoltzfus told clients in a Tuesday report.

Volume was once again light as many market participants are traditionally away on late August vacations. The market has been trading in a range around 1,080 on the S&P 500 since mid-May. See the chart below:

Read Full Story


DJIA 24,657.80 -42.41 -0.17%
NASDAQ 7,781.52 55.93 0.72%
NIKKEI 225 22,693.04 137.61 0.61%
HANG SENG 29,296.05 -400.12 -1.35%
DAX 12,600.18 -94.98 -0.75%
USD (per EUR) 1.15 0.00 -0.35%
USD (per CHF) 1.00 0.00 0.04%
JPY (per USD) 110.53 0.18 0.17%
GBP (per USD) 1.32 0.00 0.26%