Investors worry boom
in housing is over

NEW YORK » Investors retreated yesterday, sending stocks moderately lower as existing home sales slid and volatile oil prices intensified Wall Street's summer malaise.

The market's opening selloff continued after the National Association of Realtors said sales of previously owned homes dropped 2.6 percent in July as mortgage rates crept up. Even with the decline, sales were the third-highest level on record.

The latest snapshot of housing activity suggested that the sizzling market may be cooling slightly. Investors have been closely watching home sales, worried that the housing boom is nearing its end. A contraction could hurt consumer spending, since a raft of home equity loans have put cash in consumers' pockets.

Still, in late August trading, it doesn't take much to bring stocks down. No major economic reports are due this week, most companies' second-quarter earnings are out and many investors are on vacation, said Michael Sheldon, chief market strategist at Spencer Clarke LLC.

"We're not seeing a lot of conviction, either by buyers or sellers, so far this week," Sheldon said. Of the 10 sectors in the Standard & Poor's 500, only one, the materials sector, moved a shade more than 1 percent.

The Dow Jones industrial average fell 50.31, or 0.48 percent, to 10,519.58.

Broader stock indicators were also down. The Standard & Poor's 500 index fell 4.14, or 0.34 percent, to 1,217.59, and the Nasdaq composite index fell 4.16, or 0.19 percent, to 2,137.25.

Bonds rose as stocks fell, with the yield on the 10-year Treasury note at 4.18 percent, down from 4.22 percent late Monday.

Traders also worried as oil prices first rose, then fell. The volatility did not please equity investors, who are concerned that higher gasoline prices are curbing consumer spending. On Saturday, Wal-Mart Stores Inc., the world's largest retailer, said its third-quarter results would miss analysts' expectations due to rising oil prices. A barrel of light crude settled at $65.71, up 6 cents, on the New York Mercantile Exchange.

"We started the year at $42 a barrel oil-- that was a concern, but we could get past it," said David Sowerby, chief market analyst, Loomis, Sayles & Co. "When we crossed $60, I don't think anyone could question what $60 is going to do to retail sales."

Merck & Co. continued to fall, dropping 31 cents to $27.58 after Friday's $253.4 million verdict against the company in the first of 4,200 suits claiming Merck knew of problems with its Vioxx painkiller long before it pulled the drug from the market in September.