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  • bluecheese4u bluecheese4u Oct 3, 2007 9:25 AM Flag

    It's pending home sales index in August fell 6.5% to 85.5, a record low

    It's pending home sales index in August fell 6.5% to 85.5, a record low

    US homebuilder stocks rally

    Wall Street stocks were mixed on Tuesday as pending home sales fell to a record low while financials ex�tended gains.

    The Dow Jones Industrial Average closed 0.3 per cent lower at 14047.39 as some investors took profits after a record close the previous day.

    The S&P 500 was flat at 1546.64 while the Nasdaq Composite was up 0.2 per cent at 2,747.11. The Russell 2000 index of small cap stocks was 0.9 per cent firmer at 831.97.

    The National Association of Realtors said its pending home sales index in August fell 6.5 per cent to 85.5, a record low. The index has fallen 21.5 per cent in the past 12 months.

    Economists expected a fall of 2.1 per cent after July registered a 12.2 per cent decline.

    "This renewed deterioration in pending sales activity suggests another leg down for sales in coming months," said TJ Marta, fixed income strategist at RBC Capital Markets. "In turn, the renewed downturn should weigh on prices and personal consumption."

    But the news failed to reverse a two-day surge in homebuilder stocks pro�m�p�ted by a note from Citi Investment Research, which said it was time to buy into sector weakness.

    "While we don't expect any of the homebuilders to move much lower over the near-term, we expect the larger-cap builders and those with the strongest balance sheets to benefit most from any near-term bounce - much as they did coming out of the 1990 trough," Stephen Kim, an analyst, noted.

    The S&P homebuilder index climbed as high as 8.4 per cent and, although it fell back after the NAR data, it still closed 5.4 per cent higher at 453.31.

    Among the leading stocks on the S&P 500, Pulte Homes was 5 per cent higher at $15.50, DR Horton was up 6.5 per cent at $14.34, while Beazer Homes soared 12.4 per cent to $9.44.

    "Market fundamentals are actually better now than they were on July 17, which makes a strong case for the bulls," said analysts at Bespoke Investment Group. "The price to earnings, price to book and price to sales ratios of the S&P 500 are all currently lower and the index's dividend yield is higher."

    It was a mixed day for carmakers. Ford rose 4.1 per cent to $8.57, in spite of a 21 per cent decline in US sales in September. General Motors gained 2.8 per cent to $37.05 after adjusted US sales increased 4 per cent.

    The Chicago Board Options Exchange volatility index, often referred to as Wall Street's fear barometer, a measure of perceived market volatility, climbed 3.3 per cent to 18.42 on Tuesday.

    The index has declined about 30 per cent since the Federal Reserve cut interest rates last month.

    Analysts at Susquehanna Financial said selling option volatility was "the predominant trend amid the notable decline in the Vix".

    In deal news, TD Bank, a Canadian bank, announced a $8.5bn deal to buy Commerce Bancorp. Shares in Commerce slipped 0.4 per cent at $39.47, just shy of the $42 a share value of the deal.

    Research in Motion, maker of the Blackberry e-mail device, was 2.4 per cent weaker at $96.26, after an analyst cut his rating on the stock. The shares have more than doubled in value since the start of the year.

    Garmin, fell for a second day, down 6.7 per cent at $100.10, amid fears its competitive position could suffer after Nokia, a rival, agreed to acquire Navteq, the digital mapping company.

    Among the leading ten sectors on the S&P 500 financials led gains. Banking stocks again

26.56-1.03(-3.73%)Jun 24 4:05 PMEDT