Stocks wobble after runNasdaq slumps, blue chips struggle as investors digest weak home building report, fresh slide in oil.NEW YORK (CNNMoney.com) -- Stocks slipped Friday afternoon after a weak read on housing and some mixed corporate news compelled investors to retreat after pushing the major gauges higher for eight out of the last nine sessions. The Dow Jones industrial average (down 10.33 to 12,295.49, Charts) lost a few points around midday after closing at a third straight record high Thursday - and the 17th time since Oct. 3.
The broader S&P 500 (down 2.81 to 1,396.95, Charts) index lost 0.2 percent, after ending the previous session at a new six-year high. The tech-fueled Nasdaq composite (down 13.80 to 2,435.26, Charts) lost 0.6 percent after ending the previous session at its highest point since February 2001. Housing starts slumped 14.6 percent in October to a 6-1/2 year low, the government reported Friday, while building permits fell to the lowest pace in 9 years. The report underscored the steep slowdown in the housing market, and sent stocks lower and bond prices higher. "The bottom line is the housing numbers show that we will still have a drag from that sector on the broader economy in the fourth quarter of '06 and the first quarter of '07," said Michael Strauss, chief economist at Commonfund. Treasury bond prices rallied on the report, lowering the yield on the benchmark 10-year note to 4.60 percent from 4.66 percent late Thursday. Bond prices and yields move in opposite directions. Strauss said that the bond market has taken this number as evidence that the economy is weaker than has been thought recently and that, by extension, the possibility of the Federal Reserve cutting interest rates is on the table for next year. In recent days, the economic news has suggested that the Fed is unlikely to cut interest rates - following mild reads on inflation and strong regional manufacturing reports. While bets that the Fed could start cutting rates next year should ultimately prove supportive to stocks, after such a big run up, equities were vulnerable Friday. In corporate news, Hewlett-Packard (down $0.62 to $39.51, Charts) reported higher quarterly earnings and revenue late Thursday that topped expectations. The company also offered a bullish outlook for the current period. However, investors seemed to take a 'sell the news' perspective and shares fell 2.7 percent Friday morning. (Full story). Starbucks (down $2.49 to $36.94, Charts) shares fell 6 percent. Late Thursday, the specialty coffee retailer reported lower fiscal-fourth quarter profit and issued a fiscal 2007 sales and earnings forecast in a range that could miss analysts' expectations. Homebuilding shares were knocked down by the housing sector report. The Dow Jones Home Construction (Charts) index lost 1.2 percent. A variety of technology shares slipped, with the chip sector hit the hardest. The Philadelphia Semiconductor (down 5.74 to 480.19, Charts) index, or the SOX, fell 1.3 percent. In merger news, Johnson & Johnson (up $0.67 to $67.20, Charts) said it will buy heart device maker Conor Medsystems for around $1.4 billion in cash. Shares of JNJ gained 1.4 percent, while Conor (up $5.23 to $32.75, Charts) rallied 19 percent. NYMEX Holdings (Charts) surged on its first day of trading Friday, a day after the energy exchange's shares priced above a forecasted range. Market breadth was negative. On the New York Stock Exchange, decliners beat advancers two to one on volume of 770 million shares. On the Nasdaq, losers topped winners by almost three to one on volume of 850 million shares. U.S. light crude oil for December delivery slipped 69 cents to $55.57 a barrel on the New York Mercantile Exchange, flirting with a new 2006 low. COMEX gold fell $3.90 to $617.80 an ounce. In currency trading, the dollar weakened versus the yen and euro following the release of the housing market report. |
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