Stocks alternately surge and retreat
NEW YORK » Wall Street finished an extremely erratic session with a modest decline yesterday as investors parsed unimpressive data on home sales and consumer confidence and awaited the Federal Reserve's meeting on interest rates.
The Dow Jones industrial average initially slipped, soared nearly 100 points, and ultimately pulled back again -- much as it did Monday, when the blue chip index rose by triple digits only to give up the gains and finish lower.
A slight decline in May new home sales provided investors with some relief, but the report wasn't much to cheer about. The U.S. Commerce Department said sales of new homes fell 1.6 percent in May to a seasonally adjusted annual rate of 915,000 units. It was the fourth decline in the past five months -- in April, new home sales had jumped 12.5 percent.
Investors were also jittery about a larger-than-expected drop in the Conference Board's consumer confidence index, ongoing subprime lending troubles, and what the Fed might say when it decides on interest rates tomorrow. Wall Street anticipates central bankers will keep the benchmark rate steady at 5.25 percent, but it will be watching for any change in their stance on inflation that could suggest a rate cut or rate hike later in the year.
"There's a lot to keep people busy," said Scott Fullman, director of investment strategy for I. A. Englander & Co. "All of these issues are really coming into play, as we're seeing with the volatility in the market. It's going to go on for a little while longer until the market has a reason to settle down."
The stock market at times drew support from a drop in oil prices and some new takeover activity yesterday, but they weren't enough to maintain a rally.
The Dow fell 14.39, or 0.11 percent, to 13,337.66.
Broader stock indicators also fell after sacrificing large gains. The Standard & Poor's 500 index slipped 4.85, or 0.32 percent, to 1,492.89, and the Nasdaq composite index fell 2.92, or 0.11 percent, to 2,574.16.
The Dow and the S&P reach-ed record closes June 4 but have been stumbling in recent weeks, after a surge in Treasury yields raised concerns about the Fed's rate policy.
Declining issues outnumbered advancers by about 5 to 3 on the New York Stock Exchange, where volume came to 1.73 billion shares, down from 1.74 billion Monday.
The Russell 2000 index of smaller companies fell 1.33, or 0.16 percent, to 826.13.
Bonds fell after the home sales data. The yield on the benchmark 10-year Treasury note rose to 5.09 percent from 5.08 percent late Monday.
The dollar was mixed against other major currencies. Gold prices fell.
Crude oil futures for August dropped $1.41 to $67.77 a barrel on the New York Mercantile Exchange ahead of the government's weekly inventory report today.
Overall, the housing market looked dim yesterday: the Standard & Poor's home price index for April fell for the 17th consecutive month and showed its steepest year-over-year decline since 1991.
Homebuilder Lennar Corp. posted a loss for the second quarter and warned that a third-quarter loss is likely. Lennar fell $1.20, or 3.1 percent, to $37.55, and other homebuilders followed.