Stocks Down Again On More Evidence Of Weak Housing Market

(MarketWatch)  NEW YORK (MarketWatch) - U.S. stocks on Tuesday twisted lower in indecisive trade as comments from Federal Reserve Chairman Ben Bernanke offered only some respite from credit-market jitters and as an index offered further evidence of a weakened housing market.

"Unless and until the economic clouds part, we'll likely see the housing market continue to struggle," Mike Larson, analyst at Weiss Research, said of the National Association of Realtors' measure of pending home sales, which fell 4.7% in May. .

Down at the start, the Dow Jones Industrial Average tossed its losses aside within the first 10 minutes of trading, but struggled to retain its gains, recently falling 39.41 points to 11,192.55.

Of the blue-chip index's 30 components, 15 were posting gains, recently led by Wal-Mart Stores Inc. , up 1.8%.

The Dow's biggest early loser was Alcoa Inc. , off 6.5%, with the aluminum producer due to report on its second quarter after the close, kicking off the earnings season.

The S&P 500 fell 7.81 points to 1,244.5, with health care and consumer staples leading sector gains, up 1.5% and 0.6%, respectively.

Of the S&P's 10 industry groups, energy declined the most, down 4.1%, followed by materials, recently off 1.5%.

The technology-heavy Nasdaq Composite declined 7.49 points to 2,235.83.

In a positive for the equities market, the price of crude-oil futures slumped sharply for a second day, with the spot month down $4.87 to $136.50 a barrel, while Treasury prices declined slightly, with yield on the two-year note rising to 2.4%. The dollar firmed, with dollar index recently at 72.93, compared with 72.67 earlier on.

Volume on the New York Stock Exchange came to 276 million shares, and declining issues outran those advancing 4 to 3. On the Nasdaq, 182 million shares traded, and advancers topped decliners 7 to 5.

Fed funds

Ahead of the opening bell, stock index futures had trimmed their losses as Bernanke said the Fed might extend the timeframe for embattled brokerages to tap the central bank for emergency funds.

Worries that Fannie Mae and Freddie Mac may have to raise more capital, along with a report that Lehman Brothers Holdings Inc. was temporarily barred from trading oil contracts reignited financial sector worries ahead of second-quarter earnings season.

The Dow industrials dropped 56 points, the Nasdaq Composite lost 2 points and the S&P 500 fell 10 points.

Active issues

Office Depot Inc. warned second-quarter North American same-store retail sales dropped 10%. Pepsi Bottling Group Inc. edged past earnings estimates for the second quarter but cut its revenue outlook for the year.

LCD TV maker Syntax Brillian sold some assets to TCV Group and filed for protection from creditors under Chapter 11 bankruptcy rules. It expects the common shares to have no value after the filing and reorganization.

International stocks saw heavy pressure, with the Nikkei 225 losing 2.4% in Tokyo. The FTSE 100 lost 0.8% in London, though that was well off session lows.


By Kate Gibson