Stocks hit by ho-hum housing

NEW YORK (CNNMoney.com) -- Stocks floundered Monday morning, on the last trading day of the year, after a report on sales of existing homes showed little improvement in the beleaguered housing market.

The Dow Jones industrial average (INDU) and the broader S&P 500 (SPX.X) were both down nearly 0.6 percent about 30 minuets into the session. The tech-laden Nasdaq (COMPX) lost more than 0.8 percent.

Markets closed mixed Friday, after a turbulent week of low volume sessions, as housing and other economic concerns erased hopes of a year-end rally.

Trading is expected to be light Monday as investors try to close out the year on a positive note. Bond markets will close early, at 2 p.m. ET.

For the year, major indexes have faired well despite problems in the housing and credit markets. Year-to-date, the Dow is about 7 percent higher, the S&P 500 is up about 4 percent, and the Nasdaq is up nearly 11 percent.

On the housing front, the number of existing homes sold in November was essentially flat, according to the National Association of Realtors. The results were in-line with Wall Street's expectations and did little to improve the negative outlook for the housing market.

Shares of homebuilder, DR Horton Inc., (DHI, Fortune 500) were down nearly 2 percent in early trading. Other homebuilders, including Lennar Corp. (LEN, Fortune 500) and Toll Brothers Inc. (TOL, Fortune 500), were also lower Monday morning.

From the banking sector, Merrill Lynch (MER, Fortune 500) could receive another infusion of capital from sovereign wealth funds, according to British newspaper, The Observer. Last week, Merrill said it was selling $4.4 billion sake to Singapore's state-owned investment branch in an effort to shore up its capital position after taking huge subprime related writedowns in the company's third quarter.

U.S. light crude oil for January delivery fell 36 cents to $95.64 on the New York Mercantile Exchange.

Treasury prices rose, with the yield on the 10-year note falling to 4.03 percent, down from 4.07 on Friday. Bond prices and yields move in opposite directions.

In currency trading, the dollar gained slightly against the euro and lost ground versus the yen.

COMEX gold for February delivery fell $4.10 to $838.60 an ounce.