Tuesday, August 23, 2005

Bubble Worries Wall Street

From Reuters:
U.S. stocks were little changed on Tuesday, led by decliners in the home-building sector, as a report showed a drop in existing home sales.

Concerns about consumer and mortgage lending also hit bank and financial services stocks, with Citigroup Inc. (C.N: Quote, Profile, Research) down 1.5 percent. The Philadelphia KBW Bank Index fell 0.8 percent.

All 15 stocks in an index of home-builder stocks fell and the index itself was down almost 1 percent. The declines followed a report by the National Association of Realtors, which showed sales of previously owned homes slowed more than expected last month.

"Earlier this year, home-builder stocks were going up like Superman," said Al Goldman, a chief market strategist at A.G. Edwards in St. Louis. "Today's drop in the home sales report provided a good excuse for managers to finally sell those stocks and lock in some profits."

The AP Version:
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 housing 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.