Stocks mixed after new home sales plummet
NEW YORK (AP) — Stocks gave up an early gain and turned mixed Thursday after the government reported that new home sales plunged to the lowest level in nine months.
A boom in housing has been a major support for this year's rally in stocks. Home builders such as PulteGroup, D.R. Horton and Lennar fell after the Commerce Department said that home sales fell 13.4 percent in July. The drop suggests that higher mortgage rates are cooling demand for homes.
Microsoft bucked the downward trend and surged as much as 8 percent after CEO Steve Ballmer said he will retire within the next year.
The Dow was down 11 points, or 0.1 percent, to 14,950 after the first 45 minutes of trading. It was up as much as 29 shortly after the opening bell.
The Standard and Poor's 500 index edged up a fraction to 1,657.
The Nasdaq composite rose 11 points, or 0.3 percent, to 3,650. The Nasdaq exchange was closed for most of the afternoon Thursday due to a technical glitch.
The stock market has sagged in August on concerns that the Federal Reserve will start to pull back on its economic stimulus. The U.S. central bank has been buying $85 billion in bonds a month to hold down long-term interest rates and boost lending.
The Dow fell for six straight days through Wednesday, its longest losing streak of the year, and the S&P 500 has fallen 3 percent from its record close of 1,709 set on Aug. 2. The Dow is still up 14 percent for the year, the S&P 16 percent.
The summer slump would likely be seen as a buying opportunity for many investors, said Joe Bell, a senior equity analyst at Schaeffer's Investment Research.
"People have started to take notice of the stock market again. It's getting more attention in the mainstream," said Bell. "People are buying this pullback right now."
In commodities trading, the price of oil fell 18 cents, or 0.2 percent, to $104.84 a barrel. The price of gold rose $18, or 1 percent, to $1,389 an ounce.
In government bond trading, the yield on the 10-year note rose to 2.90 percent from 2.89 percent. The yield is trading at its highest since July 2011 and is up sharply since early May, when it hit its low of the year of 1.63 percent.
The dollar rose against the euro and the Japanese yen.
Among other stocks making big moves:
— Microsoft rose $2.29, or 7.1 percent, to $34.67 after Ballmer's retirement was announced.
— Pandora Media, the online music streaming company, slid $2.76, or 13 percent, to $18.95 after the company issued a disappointing profit outlook for the current quarter.
— Aeropostale slid $2.28, or 20 percent, to $8.76 after the teen retailer reported dismal quarterly results and a pessimistic outlook. Several other teen retailers including Abercrombie & Fitch and American Eagle Outfitters have also reported poor customer traffic and slumping sales.