Stocks Fall Further As Home Sales Fall To 8-year Low
NEW YORK (MarketWatch) -- U.S. stocks fell Wednesday, with the Dow shedding more than 100 points, as investors grappled with Merrill Lynch & Co.'s larger-than-envisioned losses and a sharp drop in existing home sales, inflaming fears of economic trouble ahead.
Already down, the major stock indexes solidified their losses after the National Association of Realtors reported sales of existing homes and condos fell 8% in September to their lowest level in eight years, with median sales prices down 4.2% in the past year. .
"It's not surprising that sales were weak, what is becoming more of a realization is with such high inventory levels, the highest since 1998, that prices are going down, and lower prices are going to effect everything; that is the next leg," said Peter Boockvar, equity strategist at Miller Tabek.
The Dow Industrials dropped 102.8 points, or nearly 8%, to 13,573.5, with 25 of its 30 components lower.
The S&P 500 fell 14.64 points to 1,504.95, while the Nasdaq Composite declined 47.64 points, or 1.7%, to 2,751.62.
Losses reported by Merrill , the country's largest investment bank, along with some concerns in the pipeline for Internet retail giant Amazon.com fueled worries about the extent of the damage of the recent credit-related trouble and its impact on the economy.
Merrill's third-quarter losses of $2.24 billion, or $2.82 a share, topped expectations of 45-cent a share losses on revenue of $3.25 billion, with write-downs from bad mortgage loans and related securities well above the firm's own forecast just a few weeks ago.
Topping most Wall Street estimates, Amazon.com Inc. reported strong quarterly earnings, but the online retailer's shares could be pressured on worries about its expected profit margins for the critical holiday shopping season. .
Dow component Boeing Co. reported a steep hike in third-quarter profits, but trimmed its revenue forecast for next year.
"The market had been heading into this earnings season with the knowledge earnings would be brought down by credit concerns and subprime lending, that it might spread to other areas of the economy," said Robert Pavlik, chief investment officer at Oaktree Asset Management.
"Ongoing anxieties over Wall Street's woes and the rising fears that the worst of the credit turmoil is not behind us contributes to rate cut speculation," with Fed funds futures pricing in at 92% the chances of a 25 basis point cut next Wednesday, when Federal Reserve officials meet, said analysts at Action Economics.
In early commodities trade on the New York Mercantile Exchange, crude-oil futures for December delivery fell 20 cents to $85.07, while the spot month for gold futures declined $2.90 to $670.20. .
By Kate Gibson