WORLD> America
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WORLD> America
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Wall Street tumble after sales of existing homes fall
(Agencies)
Updated: 2008-07-25 08:32 Fannie Mae and Freddie Mac fell sharply after rallying earlier in the week on legislation speeding through Congress that would grant the Treasury Department power to extend the government-sponsored mortgage companies an unlimited line of credit and to buy an unspecified amount of their stock, if necessary. The companies together back or own $5 trillion in mortgages -- nearly half the nation's total. Fannie Mae fell $2.98, or 20 percent, to $12.02, while Freddie Mac fell $1.99, or 18 percent, to $8.81. Homebuilder Lennar Corp. fell $2.47, or 18 percent, to $11.07 and KB Home declined $3.04, or 15 percent, to $16.70. Lancz said the run-up in previous sessions may have led some investors to become too optimistic about the overall market's prospects for a speedy recovery. Stocks are still down nearly 20 percent from the highs seen in October. "You're going to have these starts and stops but it's going to be a really long-term process," he said. Adding to investors' pessimism, the Labor Department reported Thursday that the number of people filing first-time claims for unemployment benefits bolted past 400,000 last week as companies trimmed their work forces to cope with a slowing economy. Investors also absorbed a mix of earnings reports from names like Ford Motor Co., which reported a big loss, and Dow Chemical Co., which said higher costs for raw materials sent earnings down sharply. But drug makers Bristol-Myers Squibb Co. and Eli Lilly & Co. both reported higher earnings as the weak dollar boosted foreign sales, and Amazon.com Inc. turned in a solid report that beat expectations. Analysts have said that so far, second-quarter earnings reports have been better than many investors expected. That had lifted the market's mood in recent sessions. Ford said it lost $8.67 billion in the second quarter, largely because of a reduction in the value of assets. The company also said it will bring six European small car models to North America by the end of 2012 as it adjusts production because of high gasoline prices. The stock fell 92 cents, or 15 percent, to $5.11. Dow Chemical fell $1.13, or 3.3 percent, to $33.11 after reporting sharply higher costs for energy and raw materials contributed to a 27 percent decline in profit. Bristol-Myers beat expectations with an 8 percent rise in quarterly profit, while Eli Lilly reported a 44 percent jump in earnings. Bristol-Myers rose 23 cents to $22.12 and Eli Lilly advanced 38 cents to $48. Amazon.com jumped $8.18, or 12 percent, to $78.72 after reporting late Wednesday that second-quarter earnings more than doubled to easily top analysts' expectations. The Internet retailer also raised its full-year revenue projections. Stephen Goddard, co-portfolio manager of the AFBA 5Star Balanced Fund, said the decline in housing numbers alongside some better-than-expected earnings reports shouldn't be surprising because mixed reports are common during economic downturns. "All the numbers don't turn at the same time," he said of economic readings. "It's usually one by one by one. You start seeing incremental improvement." Declining issues outnumbered advancers by about 4 to 1 on the New York Stock Exchange, where consolidated volume came to 5.98 billion shares, compared with 6.56 billion shares traded Wednesday. The Russell 2000 index of smaller companies fell 16.80, or 2.34 percent, to 702.39. Overseas, Japan's Nikkei stock average rose 2.18 percent. Britain's FTSE 100 fell 1.61 percent, Germany's DAX index shed 1.46 percent, and France's CAC-40 fell 1.38 percent. |
