US stocks mostly lower after weak consumer, housing data

NEW YORK: Wall Street ended mainly lower on Tuesday as a weak reading on consumer confidence and a survey showing steeper home prices declines offset the positive impact of a sharp drop in crude oil prices.

Trade was cautious a day ahead of a government estimate of US economic output in the first quarter and a Federal Reserve policy decision.

The Dow Jones Industrial Average fell 39.81 points (0.31 percent) to close at 12,831.94.

The Nasdaq managed a gain of 1.70 points (0.07 percent) to 2,426.10 while the Standard & Poor’s 500 broad-market index slipped 5.43 points (0.39 percent) to end at 1,390.94.

The market action came as the Conference Board reported US consumer confidence sank again in April amid growing worries about jobs and high energy costs. The business research firm said its index of consumer confidence fell to 62.3 from 65.9 in March.

Meanwhile a separate survey showed home prices in major US cities slumped an average of 12.7 percent year-to-year in February. The Standard & Poor’s/Case-Shiller index of prices in 20 major cities showed a 14th consecutive month of declines, as the market meltdown extended.

Investors were awaiting the outcome of a two-day Federal Open Market Committee (FOMC) meeting that opened on Tuesday, with most analysts expecting a quarter-point cut in the base lending rate to 2.0 percent and a signal that the central bank is ready to pause after aggressively cutting rates since September.

“We expect equity investors to embrace this message in a positive light as it signals the Fed is comfortable that the current global credit crisis is finally beginning to subside and the economy doesn’t need more stimulation to avoid falling into a deep, prolonged recession,” said Fred Dickson at DA Davidson & Co.

The drop in oil prices helped buoy stocks for much of the session. New York’s main oil futures contract, light sweet crude for June delivery, slid 3.12 dollars to close at 116.06 dollars per barrel.

The market also awaited a report on Wednesday on US gross domestic product expected to show a weak reading. But the consensus forecast calls for an increase of 0.5 percent on an annualised basis, not quite the recession reading some had expected.

President George W. Bush said he sees “a very slow economy” but sidestepped questions about whether he believes a recession is at hand.

At a White House news conference, Bush cautioned about “very difficult economic times,” while arguing for the need to extend tax cuts to help stimulate activity.

The stock market meanwhile was digesting earnings reports still coming in from major firms.

“Another large batch of companies has reported quarterly earnings results, but overall, they have failed to move the needle that much as the market is in a wait-and-see mode ahead of the GDP data and the FOMC decision on Wednesday,” said Patrick O’Hare at Briefing.com.

Among stocks in focus, Merck tumbled 10.4 percent to 37.14 dollars after the US Food and Drug Administration denied approval for a new cholesterol treatment for the pharmaceutical giant.

Credit card giant Visa rose 6.9 percent to 80.8 dollars after reporting its first earnings since its share offering earlier this year.

Bonds firmed. The yield on the 10-year US Treasury bond dipped to 3.825 percent from 3.835 percent on Monday and that on the 30-year bond eased to 4.559 percent against 4.565 percent. Bond yields and prices move in opposite directions. - AFP/de

Singapore Property - Buy, Sell, Rent and Invest
Jerry Hansin (+65)9027 5537
email: jerry@assetomgt.com
website: www.assetomgt.com