Stocks Falter on Pending Home Sales Data
Stocks clung to a tight range Thursday after an unexpected drop in pending home sales raised new concern about the economy.
Major indexes were little changed in afternoon trading following the National Association of Realtors’ report that its index of home sales agreements fell 7.6 percent in January from December. Contracts fell to the lowest level since April.
The drop in the number of buyers of previously occupied homes dampened some of the enthusiasm about better retail sales numbers. Macy’s Inc., Limited Brands Inc. and The Wet Seal Inc. all posted monthly sales that topped analysts’ expectations. Wal-Mart Stores Inc. raised its dividend 11 percent.
The drop in home sales brought back concerns about the economy after a stronger report on jobless benefits claims had raised hopes about the Labor Department’s monthly payroll report due out Friday.
Initial jobless claims dipped last week after two straight weeks of unexpected increases, the Labor Department reported. New claims fell to 469,000, better than the 470,000 economists had forecast.
Friday’s report is expected to show that unemployment rose to 9.8 percent in February from 9.7 percent in January as employers cut 50,000 jobs. However economists are also expecting slight gains in both average hourly earnings and average hours worked. The job market is often one of the last parts of the economy to recovery after a recession.
Daniel Penrod, senior industry analyst for the California Credit Union League in Ontario, Calif., said gains in employment are necessary to stabilize the economy and add to a sense that a recovery is occurring.
“It used to be that confidence led in to actual employment where I think the reverse is true now,” he said. “The job market has been so severe nationally that people are really feeling the lumps.”
In early afternoon trading, the Dow Jones industrial average rose 19.80, or 0.2 percent, to 10,416.56. The Standard & Poor’s 500 index rose 1.22, or 0.1 percent, to 1,120.01, while the Nasdaq composite index rose 1.61, or 0.1 percent, to 2,282.29.
Advancing stocks narrowly outpaced those that fell on the New York Stock Exchange, where volume came to 446.4 million shares compared with 434.1 million shares traded at the same point Wednesday.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.60 percent from 3.63 percent late Wednesday.
Stocks have barely budged over the past two days as investors look ahead to the monthly employment report, one of the most closely watched indicators on the economy. The Dow fell 9 points Wednesday, a day after rising two points.
Major indexes pulled back Wednesday afternoon when the Federal Reserve said the economic recovery would be slow. The Fed’s beige book report, which measures economic activity on a regional basis, pointed to weak loan demand and a soft job market.
Crude oil fell 65 cents to $80.22 per barrel on the New York Mercantile Exchange.
The dollar mostly rose against other major currencies. Gold fell.
Among retailers, Macy’s fell 2 cents to $20.01, while Limited rose 24 cents, or 1.1 percent, to $22.89. Wet Seal rose 19 cents, or 4.6 percent, to $4.30. Wal-Mart rose 25 cents, or 0.5 percent, to $53.91.
The Russell 2000 index of smaller companies rose 0.38, or 0.1 percent, to 649.64.
Overseas, Britain’s FTSE 100 fell 0.1 percent, while Germany’s DAX index and France’s CAC-40 each fell 0.4 percent. Japan’s Nikkei stock average fell 1.1 percent.
3/4/2010 1:11 PM STEPHEN BERNARD, AP Business Writers TIM PARADIS, AP Business Writers NEW YORK