Stocks suffer biggest pullback in 2 months
NEW YORK » Stocks suffered their biggest pullback in two months yesterday, with the Dow Jones industrials logging a triple-digit decline as a lackluster home sales report and a disappointing bond auction halted the market's two-day rally.
The market drifted lower after the National Association of Realtors said sales of U.S. existing homes fell 0.8 percent in December to a seasonally adjusted annual rate of 6.22 million.
Then, in the afternoon, a less-than-enthusiastic reception for the Treasury's latest sale of five-year notes sent bond prices falling and yields rising sharply, rattling stock investors already worried about higher interest rates.
Stocks fell further while the yield on the 10-year Treasury note rose to highs not seen since the summer.
Earlier in the day, investors' cheer over quarterly reports from eBay Inc., Nokia Corp., and AT&T Inc. had failed to translate to gains as strong earnings news had done in previous days.
"We had a great run," said Ryan Larson, senior equity trader at Voyager Asset Management, a division of RBC Dain Rauscher. "I think people are kind of tired right now and looking for other avenues."
The Dow fell 119.21, or 0.94 percent, to 12,502.56.
Broader stock indicators also fell. The Standard & Poor's 500 index fell 16.23, or 1.13 percent, to 1,423.90 and the Nasdaq composite index was down 32.04, or 1.30 percent, at 2,434.24.
The Dow's decline erased nearly all the previous two-day rally of about 145 points.
Declining issues outnumbered advancers by more than 3 to 1 on the New York Stock Exchange, where consolidated volume came to 3.11 billion shares compared with 2.86 billion traded Wednesday.
The Russell 2000 index of smaller companies was down 9.84, or 1.24 percent, at 784.19.
Bond prices fell in response to the auction and the Realtors' news, which also showed the inventory of existing homes available for sale fell 7.9 percent to 3.51 million.
The yield on the benchmark 10-year note jumped to 4.87 percent from 4.81 percent Wednesday. The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude fell $1.14 to $54.23 per barrel on the New York Mercantile Exchange. Investors halted recent sharp drops after growing more confident OPEC production cuts would occur.
In corporate news, eBay jumped $2.45, or 8.2 percent, to $32.45 after the online auction house posted a 24 percent increase in profits as sales rose 29 percent.
Ford Motor Co. rose 2 cents to $8.22 even as the automaker reported a loss for 2006 of $12.7 billion -- the worst in its 103-year history.