Bears Drive Down Stocks on Housing, Economic Data

Updated from 1:58 p.m. EST

U.S. stocks were plumbing negative territory Wednesday, as economic studies revealed that homebuilding slowed to levels last seen in the 1950s and consumer prices recorded a record decline.

The Dow Jones Industrial Average was losing 207 points to 8218, and the S&P 500 was down 30 points to 830. The Nasdaq was falling 55 points to 1428.

Investors appeared hesitant to buy in the face of significant declines in the housing market. The Census Bureau said that housing starts declined 4.5% to an annual rate of 791,000 for October, the largest one-month decline on government records dating back to 1959.

"Lowest of all time kind of speaks for itself," said Mike Feroli, U.S. economist for JPMorgan Economics. "If you're looking for a silver lining, the pain now hopefully puts you in a place to clear out inventories down the line." But in exchange for cleared inventories, the U.S. will suffer declines in construction employment and slower growth, he said.

Separately, the Bureau of Labor Statistics reported that its consumer price index fell 1% for October thanks in part to falling energy prices. The CPI's decline was its largest on record. Economists were expecting a decline of 0.8%. The core rate dropped 0.1%, following a 0.1% uptick in September.

Even accounting for the index's volatile components, said Feroli, the decline in prices appears to be broad-based. He said that although the decline in consumer prices may not be this sharp every month, he expects prices to continue to flag going forward.

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