Action Insight | Written by ActionForex.com | Jul 25 07 14:29 GMT | Forex Mid-Day Technical Report Dollar Rebound Continues, Ignore Disappointing Housing Data Dollar reacts little to disappointing housing data from US and continues to edge higher against Euro and Swissy in early US session. Existing home sales fell for the fourth consecutive month in Jun by -3.87% to 5.75m annualized rate, which is the slowest pace since Nov 02. Prior month’s figure was revised slightly lower from...
Stocks Mostly Lower on Lending Worries
July 26th, 2007
(07-25) 11:30 PDT NEW YORK, (AP) —
Stocks recoiled Wednesday as signs of a tougher lending climate mounted, prompting investors to give back gains fueled by strong profits from Amazon.com Inc. and Boeing Co.
Wall Street was still jittery after Tuesday’s 226-point tumble in the Dow Jones industrial average, triggered in part when mortgage lender Countrywide Financial Corp. posted a disappointing profit and forecast.
Some market watchers worry that deteriorating lending conditions in both the home mortgage and corporate debt markets will cork this year’s huge stream of dealmaking. Buyouts usually involve taking on debt, and Wednesday, the banks raising funds for the turnaround of Chrysler Group had to postpone a $12 billion debt offer after investors balked at the deal’s terms, according to people familiar with the situation who were not authorized to speak publicly.
Meanwhile, the National Association of Realtors on Wednesday confirmed that the housing market is far from recovery when it reported that sales of existing homes dropped 3.8 percent in June to the slowest rate in more than 4 years. The figure was worse than analysts expected, and followed data from the Mortgage Bankers Association showing mortgage applications fell for the first time in four weeks to a five-month low.
The market will likely remain rocky as Wall Street tries to assess whether problems involving risky home lending will hurt the broader economy.
“It’s an open-ended unknown, and that’s the problem,” said Richard E. Cripps, chief market strategist for St. Louis-based broker Stifel Nicolaus. He added, though, the stock market’s volatility is not necessarily a bad thing. “It’s shaking a tree, and it’s shaking out the bad apples, shaking out investors’ concerns. The overall picture is pretty constructive for equities.”
In midafternoon trading, the Dow Jones industrial average rose 23.25, or 0.17 percent, to 13,740.20, after trading up more than 100 points and down more than 40.
But broader stock indicators were down. The Standard & Poor’s 500 index fell 0.49, or 0.03 percent, to 1,510.55, and the Nasdaq composite index decreased 4.15, or 0.16 percent, to 2,635.71. Declining issues outnumbered advancers by about 3 to 1 on the New York Stock Exchange, where volume came to 1.36 billion shares.
Treasury bonds rose after the weak housing data prompted investors to buy safe government assets. As bond prices rose, the yield on the benchmark 10-year Treasury note fell to 4.92 percent from 4.95 percent late Tuesday.
The dollar rose against other major currencies, while gold prices fell.
Light, sweet crude for September delivery rose $1.95 to $75.51 a barrel on the New York Mercantile Exchange, bouncing back from two straight days of steep declines. The U.S. government Wednesday reported that crude oil supplies fell and gasoline stockpiles rose last week, as expected.
Despite concerns about waning demand for risky debt, the acquisitions keep coming. Siemens AG said it will sell its VDO auto parts unit to Germany’s Continental AG in a $15.67 billion deal, and Merck & Co. agreed to buy NovaCardia Inc., a clinical-stage pharmaceutical company focused on cardiovascular diseases.
Merck, one of the 30 Dow companies, advanced $1.61, or 3.1 percent, to $53.33.
Though a few major companies have posted second-quarter financial results over the past couple weeks that missed Street forecasts, investors got some good news on earnings Wednesday.
Boeing Co. was the biggest gainer in the Dow, rising $3.56, or 3.4 percent, to $107.36. The plane manufacturer posted a $1.1 billion profit in the second quarter, up from a year-ago loss, as it gets closer to overtaking its European rival Airbus in deliveries.
And Amazon.com Inc. surged $17.48, or 25 percent, to $86.73, after the Web retailer said its second-quarter profit more than tripled on strong sales of books, music and electronics worldwide.
With investors are mainly focused this week on companies’ earnings and forecasts for the rest of the year, they found little direction in the Federal Reserve’s Beige Book. The report, which detailed mixed economic conditions in various parts of the country, said the overall economy kept growing at a moderate pace in June and early July, despite the ongoing housing slump.
The Russell 2000 index of smaller companies fell 7.59, or 0.93 percent, to 804.27.
Overseas, Japan’s Nikkei stock average fell 0.80 percent. Britain’s FTSE 100 fell 0.68 percent, Germany’s DAX index lost 1.46 percent, and France’s CAC-40 declined 1.19 percent.
___
On the Net:
New York Stock Exchange:
Nasdaq Stock Market:
« Northern soul: Bilbao, Pamplona and Gijon offer the highest quality of life in Spain
Southern Spain may get all the sun, but a recent survey of quality of life in Spanish cities found the top three are in the north. It put Bilbao, Pamplona and Gijon above Seville, Barcelona and Madrid on the basis that residents there are more satisfied with their quality of life than anywhere else. Personal safety, housing, culture and public services were just some of the criteria measured. These issues don’t just affect the locals – they improve life for holiday home-owners, too. The...