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Housing Worries Hit Stocks

Robert Holmes

Stocks in the U.S. finished to the downside Tuesday following a disappointing report on consumer attitudes and more unsettling news from the housing sector.

The Dow Jones Industrial Average lost 71.78 points, or 0.58%, to 12,397.29, pressured by a 3% loss in DuPont (DD Quote - Cramer on DD - Stock Picks). The S&P 500 slipped 8.89 points, or 0.62%, to 1428.61, and the Nasdaq Composite gave back 18.20 points, or 0.74%, to 2437.43.

About 2.61 billion shares changed hands on the New York Stock Exchange, and volume on the Nasdaq reached 1.72 billion shares. Losers beat winners 2 to 1.

"We had a cumulative effect of multiple bad headlines and fears combining today," said Art Hogan, chief market analyst with Jefferies. "Last week, we were exuberant about the Federal Reserve and housing data, while today the pendulum swung to the other direction."

The major indices were pressured after the latest reading on consumer confidence missed forecasts. The Conference Board said the consumer confidence index for March dropped to 107.2 from 112.5 in February, the first decline in five months. Economists expected a reading of 109.0.

Consumer confidence has been hurt in part by the ongoing housing slowdown, and homebuilder Lennar (LEN Quote - Cramer on LEN - Stock Picks) offered more signs of weakness. The company said its first-quarter orders and earnings slumped year over year, and it backed off the earnings target it had provided in January.

To view Farnoosh Torabi's video take on today's market, click here

Lennar also said it hasn't seen improvement in the housing market, noting that troubles in the subprime lending market are exacerbating conditions. Shares dipped 4 cents, or 0.1%, to close at $44.50, but were down nearly 3% in the after-hours session.

The company's news came as Standard & Poor's reported that home prices fell 0.2% in January in the 20 largest metro areas of the country, based on the S&P Case-Shiller Index.

The latest housing data weighed on the sector. The Philadelphia Housing Sector Index fell 1.5%. Among other subsector indices, the Amex Airline Index shed 1.1%, the S&P Retail Index ended down 1%, and the Philadelphia/KBW Bank Sector Index was off 0.7%.

The market's weakness comes ahead of Federal Reserve Chairman Ben Bernanke's annual testimony on Capitol Hill. He will begin speaking before the Joint Economic Committee on Wednesday at 9:30 a.m. EDT.

The testimony will feature the first remarks from Bernanke since the Federal Open Market Committee decided last week to keep its federal funds target unchanged at 5.25% for the sixth straight meeting.

In the policy statement, the Fed said that readings on core inflation "have been somewhat elevated," and that "the committee's predominant policy concern remains the risk that inflation will fail to moderate as expected."

"Wall Street is a little nervous about Bernanke taking back from last week's Fed statement," said Barry Hyman, equity market strategist with EKN Financial. "The statement last week takes us away from a more measured view of economic growth and inflation. We need more explanation where we could see some rhetoric change."

In other corporate news, shares of DaimlerChrysler (DCX Quote - Cramer on DCX - Stock Picks) were higher after The Detroit News said the first bids for the automaker's U.S. division could come by the end of this week. The report came as DaimlerChrysler said it would delay its first-quarter earnings release to May 15 from April 26, citing a change in accounting standards.

Shares of DaimlerChrysler rose $1.47, or 1.8%, at $82.67. Rival General Motors (GM Quote - Cramer on GM - Stock Picks) eased 0.2% at $32.18, and Ford (F Quote - Cramer on F - Stock Picks) was down 0.3% to close at $7.85.

Target (TGT Quote - Cramer on TGT - Stock Picks) said late Monday that March same-store sales growth should meet the company's previous forecast of 11% to 13%. Still, shares of the retailer lost $1.02, or 1.7%, at $60.54.

Treasury prices were lower. The 10-year note was down 2/32 in price to yield 4.61%, and the 30-year bond was losing 3/32, yielding 4.81%.

Crude futures reversed losses and eked out a small gain, extending their recent ascent. Tensions remained between the West and Iran, which continues to hold 15 British sailors and marines captive after seizing them in the Persian Gulf on Friday.

The benchmark May contract, which has added 6.2% since becoming the front-month contract nearly a week ago, tacked on 2 cents to close at $62.93 a barrel.

Elsewhere, natural gas added 25 cents at $7.50 per million British thermal units. Among precious metals, gold futures were off $1.40 at $662.50 an ounce, while silver gave back 18 cents at $13.41 an ounce.

Overseas markets were mixed. Tokyo's Nikkei fell 0.9% to 17,365, and Hong Kong's Hang Seng shed 0.3% to 19,707. Frankfurt's Xetra DAX rose 0.4% to 6858, and London's FTSE 100 was flat at 6292.