Lower Consumer Confidence Index and bad housing news dampen market sentiment
Continued bad news about housing and a decline in consumer confidence dampened the investor confidence today and US Market was hit badly for the entire day. An uncertain outlook from homebuilder Lennar and a report showing widespread drops in home prices led to a bearish market breadth. All the three indices closed in the red. Of the eight sectors closing lower, Materials was the day's biggest laggard. Absence of any support from Financials was also noteworthy.
25 out of 30 stocks closed lower for the day. For the day (27 March, Tuesday) the Dow Jones Industrial Average closed lower by 71.78 points at 12397.29, Nasdaq lower by 18.2 points at 2437.43 and S&P 500 lower by 8.89 points at 1428.61. Exxon Mobil, AT&T, Altria and Caterpillar were the major Dow winners. Du-Pont, Amex and P&G were the Dow laggards.
The market came under early pressure after Lennar said first-quarter earnings plunged 73% from the year earlier. The company withdrew its 2007 earnings guidance. Lennar also warned that "soft market conditions have been exacerbated by the well-publicized problems in the subprime lending market." After falling sharply at the opening, however, Lennar's stock recouped most of its losses in afternoon trade, closing down just 4 cents at $44.50.
Adding to these housing market's woes, S&P/Case-Shiller home-price index, said U.S. home prices continued to fall in January, with prices in 10 major cities now down 0.7% y-o-y. This further worsened market sentiment
Also, the Consumer Conference Board's monthly survey said that consumer confidence index fell in March for the first time in five months to 107.2 (consensus 109.0) from a downwardly revised reading of 111.2 in February. Rising gasoline prices and the recent turmoil in the stock market, were cited as the major reasons.
There were 1.382 billion shares exchanging hands on the New York Stock Exchange and 1.730 billion trading on the Nasdaq stock market. Declining issues outpaced gainers by 11 to 5 on the NYSE and by 19 to 9 on the Nasdaq.
Crude-oil futures for light sweet crude for May delivery closed at $62.93/barrel (higher by $ 0.02/barrel or 0.03%) on the New York Mercantile Exchange. Prices increased marginally after U.K. increased pressure on Iran to free 15 navy personnel taken prisoner by armed Iranian forces last week.
Tomorrow, the focus will be on Federal Reserve Chairman Ben Bernanke, who is scheduled to testify before the Senate Banking Committee about the state of the housing market